Spansion and SMIC Expand OEM Agreement

SMIC to expand its 65nm production capacity and manufacture Spansion 45nm flash memory Wuhan, China, May 17, 2011 – Spansion (NYSE: CODE), the leading supplier of NOR flash memory, and the largest and most advanced in China The foundry company SMIC International Semiconductor Manufacturing Co., Ltd. ("SMIC", NYSE: SMI, SEHK: 0981. HK) announced today that both parties will extend the current OEM contract to expand SMIC currently has 65-nm foundry capacity and will manufacture its 45-nanometer flash memory for Spansion.

As part of the agreement, Spansion will prepay SMIC 50 million US dollars for future wafer purchases. Prepayments will be delivered in three separate installments within the next 12 months, which will help SMIC purchase equipment for Spansion's products.

SMIC's cooperation with Spansion began with the 2008 65nm MirrorBit® flash memory. Spansion also manufactures its 65nm products at its flagship plant in Austin, Texas, USA.

“SMIC's world-class foundry services and teamwork support our flexible production strategy to meet the growing demand for customer differentiation,” said John Kispert, President and Chief Executive Officer of Spansion. "After the joint venture between SMIC and the Wuhan government, we expect the partnership with SMIC will be even stronger."

Spansion and SMIC will begin the 45-nanometer flash memory technology transfer this month, and is expected to enter volume production in the first half of 2012.

"Spansion's successful collaboration with SMIC is based on the commitment of both parties to high quality and reliability," said Dr. Wang Ningguo, President and CEO of SMIC. "We are very pleased to be able to expand and expect long-term and continuous cooperation between the two parties in China."