This week, Spansion (Sunnyvale, Calif.), the world's largest NOR flash supplier, filed for bankruptcy amid growing anger among former employees at the company.

Jim Handy, an analyst with Objective Analysis (Los Gatos, Calif.), said that Spansion has three options: 1. A merger with another company; 2. Re-working the company into a new Spansion; 3. Getting additional financing options.

Insiders at Spansion see Micron Technology Inc. and/or Toshiba Corp. eventually buying Spansion, which has a strong IP portfolio in flash memory. For example, Spansion has a new memory technology, dubbed EcoRAM. The new memory device is designed to solve the energy consumption crisis in datacenters.

Other possible suitors could include Japan's Elpida Memory Inc. and Taiwan's Macronix International Co. Ltd., according to other insiders. ''But given the state of market, I would think the interest (in buying Spansion) would wane,'' one source said.

Until then, Spansion ''is simply using the protection offered by U.S. bankruptcy laws to find a better business model that will see it through the current downturn,'' Handy said in a report. ''Spansion tells us that this step allows the company to continue to satisfy their customers' needs while conserving cash.''

There are no plans to dissolve the company. ''Spansion is very careful to reassure that there are no plans for the company to be liquidated,'' Handy said. ''Spansion is the market share leader in NOR, and the loss of the company would be devastating both to the NOR business and to Spansion's customers.''

On the other hand, ''Spansion has eliminated or postponed projects that have no near-term return, directing their focus on the 'here and now' rather than the long term,'' he added.

Spansion itself declined to elaborate on its ''postponed projects.'' The company reiterated that it is still in business. ''We are alive and well and shipping products,'' said Tom Eby, executive vice president of Spansion's Consumer, Set-Top Box and Industrial Division (CSID).

Eby also reiterated what Spansion's new CEO said at the time of the Chapter 11 filing earlier this week. "Given our focus on Spansion's future, management and the board have concluded that chapter 11 provides the most effective means for Spansion to preserve its business, meet its post-petition obligations and maintain customer confidence and continuity while we complete this restructuring," said President and CEO John Kispert, in a statement earlier this week.

But the prospects remain grim for Spansion and other suppliers of NOR flash, including Numonyx, Samsung, SST, and others. Numonyx is the memory spin-off of Intel Corp. and STMicroelectronics Inc.