Question-and-Answer Session
Operator
Your first question comes from Glen Yeung - Citi.
Analyst for Glen Yeung - Citi
As you are getting to 2K wafers per week in SP1, I’ve got some good detail here on cost effectiveness. It sounds like that is as far as you are currently planning on going in 2008. Is there any opportunity to take that to 3K wafers? If not, can you give me a sense of how much gross margin or how the gross margin progression would look through the year, let’s say first half first versus second half?
Bertrand Cambou
Well, you have a lot of questions. We’ll try to answer all of them but first of all the most important, the financial model we have is 2K per week, is a very good position and gives us the opportunity to be profitable, positive in that asset contribution here. That is good news because the traditional model here you have to push the fab much higher but the productivity gain we have at 2K is very encouraging.
Now, we are not planning any more capital. We are going to be right now making a pause on capital for obvious reasons, if we look at what’s going an around us, but I believe that the manufacturing people are going to find a way to see if can they squeeze a bit more out of the 2K per week by productivity enhancement. So we are still going to ask Jim Doran and our operating guy in Japan to see if they can squeeze a little bit more.
Then we are going to prepare the steps to investment in ’09. The current plan here is to go to 4K that investment is absolutely terrific. Now to us the situation here is when we are going to be at 4K is most likely going to be greatly 45 nanometer where we are going to be even more productive because the 45 nanometer which is already I would say 95% banked as we speak, we’re already running it in SDC, private line, but it is essentially going to be a shrink version of the 65 that we are going to able to do in the same factory here.
You are going to see Spansion’s strategy here to squeeze what we have in ’08; very, very prudent on capital and to go to next year with a big push at 45 and 4K per week to take us to the next level.
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