Cypress, Spansion driven to merge by auto and embedded opportunities

On the face of it, the deal seems to make sense. Both companies have reasonable positions in the automotive market and both are amongst the front runners in memory technology. Last year, Spansion acquired Fujitsu's analogue and microcontroller business, which is heavily focused at the auto market, while Cypress has a handy range of touch technologies, many of which are auto focused. But the central message is the newly merged company sees opportunities in the broader embedded systems market. The $4billion deal – which sees Spansion shareholders receive Cypress stock – comes with the usual caveats involved in a merger. In this case, it's the management's belief that it can save $135m a year through operating efficiencies. And that's likely to be cuts in staff. Spansion has travelled an interesting road since its origins in the 1990s. Originally addressing flash memory under the guise of Fujitsu AMD Semiconductor, it was renamed FASL then 'cut loose' by its parents. Almost immediately, it ran into financial difficulties. By 2009, it had filed in the US for bankruptcy protection, but has pulled itself back from the brink. Perhaps the big question for this merger is whether the whole will be bigger than the sum of its parts.