Question-and-Answer Session
Operator
Thank you, the question-and-answer session will be conducted electronically. (Operator Instructions) And the first question comes from Glen Yeung, Citigroup.
Glen Yeung - Citigroup
Thanks. I'm looking at pricing that was obviously down in the quarter. Your point to access inventories at a competitor. Your inventories for the quarter are 4.4%, and obviously pricing was a disaster. At what point were you trying to say, maybe, not to be accelerating my spending but maybe pulling it back.
Bertrand Cambou
Glen, right now we are definitely pulling back all investments on material technology. The strategy we have is to go full blast at 300 mm because that is going to give us, we think a clear advantage. It is because, being at 65-nanometer MirrorBit, which is essentially not ahead in cost structure and 300 mm. While our competitor is going to be stuck with floating gate technology which is poor yielding at 200. We think that is going to give us a clear advantage. We don’t want to be (inaudible) forever. You need to know that, the situation we have around us, we have to be very focused here. And we are going to be, I would say more focused than ever, Glen. The price environment here has been worse than I can even remember in my entire career. I don't remember when that happened and at that point, we are committed and we are going to be leading in cost and have to actually pull on one hand and push on the other hand.
Glen Yeung - Citigroup
So, when you are talking about pulling back on material technology, should we then expect to see a reduction in wafers, bits and/or CapEx?
Bertrand Cambou
What we are going to do is to redirect the CapEx as much as we can to accelerate Spansion One and obviously reduce the other one. One of the first things that we're going to do is, right now we have an investment in Texas and others and we're going to pull them in favor of Spansion One.
Glen Yeung - Citigroup
But, we still should expect to see bit production increase substantially?
Bertrand Cambou
The demand is great, Glen. But the point is, the things that we have right now is, there is a strong demand. We are glad, if I look at the backlog, if I look at the customer, we are being kind of very, very successful as far as big major OEM as we tell you. We have a great demand. What we need right now is simply to be ahead of the pack in the cost per bit curve. And that's why we are saying that, right now we have wafers in Spansion One in the line. They are running great. Everything has been installed faster. I would say the manufacturing team has been kind of doing a remarkable job here. The 65-nanometer yielding as we speak, we are sampling online based solutions on wireless as we speak. The customer demand is there for those solutions, which means that we are in there and we are going to get where we want to be by not being a (inaudible) but being ahead.
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