Spansion, the memory chip maker being spun-off by Advanced Micro Devices, has been forced to cut the price range of its initial public offering, expected to take place on Friday.
Spansion said on Thursday the offer price would be between $13 and $14, down from $16 to $18. It still plans to sell 39.2m shares.
The move illustrates the lack of appetite among investors for memory chip stocks. AMD itself is spinning off the unit after seeing it drag down its results.
AMD’s processor business has been showing impressive growth but the NOR flash memory market that Spansion specialises in has suffered from volatility, over-supply and falling prices.
In the second quarter it reported an operating loss of $90m followed by $50m in the third quarter. Last month, it warned of another loss in the fourth quarter caused by under-utilisation of its factories.
Analysts at Moors & Cabot said in a note that the forecast was disconcerting and it put the credibility of the IPO in question.
Spansion was expected to be the biggest technology IPO of the year. But in a filing to the US Securities and Exchange Commission it said it would now raise $493m rather than $622m, putting it behind database provider Neustar and Dolby Labs.
Spansion is a joint venture with Fujitsu, 60 per cent owned by AMD. After the IPO, AMD will retain a 40 per cent stake, with 27 per cent for Fujitsu.
Intel, AMD’s main rival in Nor flash, this week won Federal Trade Commission approval for a joint venture with Micron to develop Nand flash, which is proving more popular in devices such as mobile phones.
Citigroup, Credit Suisse First Boston, Merrill Lynch, Morgan Stanley, Deutsche Bank, UBS and Dresdner Kleinwort Wasserstein are underwriting the offering.
Spansion will trade on the Nasdaq under the symbol SPSN.