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Toshiba in talks to buy Spansion – sources

  Japan’s Toshiba Corp is in talks to buy US chip maker Spansion, two industry sources said, in the latest sign of pressure for consolidation in the struggling memory sector.


Terms of the deal were not available, according to one of the sources, who is close to a Spansion production partner. Spansion was once a joint venture of Fujitsu and AMD, both of which are still major stakeholders with 11.4% and 8.7%, respectively, according to Reuters Knowledge.

Spansion, which has a market capitalization of $167.2 million, has seen its stock plummet 72% this year as the highly cyclical memory chip sector struggles with oversupply that has hit most major players. Its shares rose 7.7% on Monday in New York trading.

Toshiba spokesman Keisuke Ohmori said his company was not in talks to buy Spansion, and was also not considering such a move. The deal would mark the latest acquisition or purchase of a stake in a smaller memory player by a larger rival, as smaller producers have fewer resources and clients to help them weather the current downturn.

Samsung, the world’s top memory chip maker, is in the process of trying to acquire SanDisk, a maker of flash memory cards, although SanDisk rebuffed an early overture saying the price was too low. South Korea’s Hynix, the world’s second biggest memory chip maker, said in August it would buy 8.6% in ProMOS Technologies, as the mid-sized Taiwan chipmaker struggled to raise cash. Both Hynix and ProMOS shares have taken a beating this year, down 32% and 65%, respectively.

Most memory chip makers have posted a steady stream of losses in recent quarters, amid an oversupply that has caused prices to plummet. Some producers have cut back their output in recent months to try to prop up prices, but their efforts so far have had limited impact.

Earlier this week, research house iSuppli said makers of DRAM (dynamic random access memory), the most popular kind of memory, will face tougher challenges in servicing debts and financing capital expenditure as banks become more cash strapped under the global credit crunch. (Reuters)