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Spansion Broadens Strategy for Partnerships in Technology Development and Manufacturing | Cypress Semiconductor

Spansion Broadens Strategy for Partnerships in Technology Development and Manufacturing

Last Updated: June 19, 2008

To Focus Capital on Leading-Edge Technology and Resources for Margin Enhancing Opportunities

SUNNYVALE, Calif., June 19, 2008 -- Spansion Inc. (Nasdaq: SPSN), the world's largest pure-play provider of Flash memory solutions, today announced the broadening of its corporate strategy to create strategic alliances, with plans to transfer certain assets to third parties and establish manufacturing and technology partnerships. Spansion plans to focus its own capital investments on the accelerated development of leading-edge MirrorBit(R) Flash memory technology, the development of value-added, high margin solutions, as well as its state of the art 300-millimeter SP1 Flash memory manufacturing facility in Aizu-Wakamatsu, Japan.

Spansion initiated this strategy in September 2006 when the company entered into an agreement to divest its JV1 and JV2 manufacturing facilities to Fujitsu. This transaction resulted in approximately $150 million in cash to Spansion.

"The plan to partner through strategic alliances is a deliberate program to focus investments and resources on strategic, differentiated and value- added business opportunities," said Bertrand Cambou, CEO of Spansion. "At the same time, we can focus our investments and support the right mix of assets to maintain and increase our competitive advantage."

The strategic partnerships are initially anticipated to cover three primary focus areas: development of new technologies; final test and assembly; and mature and trailing-edge wafer manufacturing. As part of the strategy, Spansion plans to continue to partner with foundries for the production of high volume commodity products, enabling Spansion to benefit from the scale of much larger players. In addition, the company plans to transfer some of its world-class manufacturing, test and assembly assets to third parties, who can leverage those capabilities to address a broader diversified customer base, while providing Spansion the same level of service and support at a competitive cost. As a result, Spansion expects to focus its capital on its own core competency, the manufacturing and development of leading-edge MirrorBit Flash memory technology while leveraging the expertise of its partners.

About Spansion

Spansion is a leading Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing and selling Flash memory solutions. For more information, visit http://www.spansion.com.

Cautionary Statement

This release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding including plans to transfer certain manufacturing and technology development assets to third parties and establish related partnerships, plans to focus capital investments on: (i) the accelerated development of leading-edge MirrorBit(R) Flash memory technology; (ii) the development of value-added, high margin solutions; and (iii) the company's 300-millimeter SP1 Flash memory manufacturing facility in Aizu- Wakamatsu, Japan, the expectation that planned strategic partnerships will cover three primary focus areas: (i) development of new technologies; (ii) final test and assembly; and (iii) mature and trailing-edge wafer manufacturing, plans to continue to partner with foundries for the production of high volume commodity products and the expectation to benefit from the scale of much larger players, plans to transfer manufacturing, test and assembly assets to third parties, while providing the company the same level of service and support at a similar cost. Investors are cautioned that the forward-looking statements in this release involve risks and uncertainties that could cause actual results to differ materially from the company's current expectations. Risks that the company considers to be the important factors that could cause actual results to differ materially from those set forth in the forward-looking statements include the possibility that the company is unable to identify qualified and interested strategic partners or, if such partners are identified, negotiate favorable agreements with such partners, that prospective partners are unable to obtain necessary financing to complete any proposed transactions, that the planned outsourcing of certain services does not generate the expected cost savings, demand for the company's Flash memory products will be lower than currently expected; that average selling prices may decline; loss of key intellectual property arrangements creates a greatly increased risk of patent or other intellectual property infringement claims; the high cyclicality of the Flash memory market which has experienced severe downturns; that adverse financial market conditions may impeded access to or increase the cost of financing operations and investments; that Spansion may not be effective in expense reduction efforts; that OEMs will increasingly choose NAND-based Flash memory products over the company's MirrorBit architecture-based Flash memory products for their applications; that the company has a significant amount of debt, and such debt could subject us to restrictive covenants; that the company may not achieve facilities and capacity implementation schedules as a result of factors such as insufficient cash flows and unavailable external financing; that the company may lose a key customer, or experience a reduction of demand from a key customer; that the company will not successfully develop, introduce and commercialize new products and technologies or to accelerate our product development cycle; that competitors may introduce new memory or other technologies that may make our Flash memory products uncompetitive or obsolete; that the company may fail to successfully develop next generation products; customers' ability to change booked orders may lead to excess inventory; that the company's investments in research and development may not lead to timely improvements in technology; that the company may experience manufacturing constraints or fail to achieve manufacturing efficiencies; the company may experience manufacturing disruptions of suppliers interrupt supply or increase prices for raw materials; that Spansion may not realize the expected value of Saifun's NROM technology; the merger with Saifun may not result in benefits that Spansion anticipates as a result of integration or other challenges; and intellectual property claims or litigation could cause the company to incur substantial costs or pay substantial damages or prohibit sales of its products. The company urges investors to review in detail the risks and uncertainties in the company's Securities and Exchange Commission filings, including but not limited to the company's Annual Report on Form 10-K for the fiscal year ended December 30, 2007 and the company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2008. The company assumes no obligation to update any forward-looking statements or information included in this press release.

Spansion(R), the Spansion Logo(R) , MirrorBit(R), MirrorBit(R) Eclipse(TM), ORNAND(TM), ORNAND2(TM), HD-SIM(TM) and combinations thereof, are trademarks of Spansion LLC. Spansion, the Spansion Logo and MirrorBit are registered in the US and other countries. Other names used are for informational purposes only and may be trademarks of their respective owners.

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