SAN JOSE, Calif. -- Spansion Inc. provided an update on its ongoing restructuring efforts that are aimed for the company to emerge from a Chapter 11 bankruptcy filing by the fourth quarter of this year.

As part of those efforts to emerge from Chapter 11, the NOR flash provider bucked the trend and reported decent sales results in the quarter despite the downturn. In addition, the company also revamped its ties with its Japanese subsidiary and backed away from selling its entire wireless unit.

It also recently shuttered an advanced, 300-mm R&D fab, located by its headquarters in Sunnyvale, Calif. This is part of a decision made by Spansion to move away from the next-generation process technology race.

And Spansion also confirmed rumors that the company scrapped plans to form a backend venture with Taiwan's Advanced Semiconductor Engineering Inc. (ASE). That deal was announced in recent times.

It's been a rough year for Spansion and other memory suppliers amid the IC downturn. Loss-ridden Spansion was struggling even before the downturn, thanks in part to a high cost structure and a dwindling NOR market.

Then, the bottom fell out. As reported, on Feb. 9, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the ''Corporate Reorganization Law'' of Japan to obtain protection from its creditors as part of the company's restructuring efforts.

Then, in March, Spansion itself filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code.

On Tuesday (July 28), Spansion said that it is no longer able to consolidate the financial results of Spansion Japan in accordance with U.S. GAAP. Spansion's Japanese subsidiary still provides service for Spansion. Spansion also buys wafers from Spansion Japan, which has a 300-mm fab in that nation.

The fate of Spansion Japan remains unclear. But as a result of the commencement of corporate reorganization proceedings in Japan, Spansion and Spansion Japan must now negotiate new third-party agreements, which is subject to the approval of various parties, including the creditors of each company.

Excluding its Japanese unit, in the second quarter of 2009, Spansion on Tuesday said net sales were $376 million. The company did not disclose its net profit or loss. It would provide that at a later date.

Sales for the second quarter were ''higher than anticipated,'' said John Nation, director of corporate marketing for Spansion. In comparison, Spansion said that sales for the first quarter of 2009 were $401 million. In the first quarter of 2009, net loss on a GAAP basis was $89 million.

Net sales for the second quarter are reflective of its strategy to focus on the embedded solutions market. Previously, the company had two main areas of focus: embedded and wireless.

In April, Spansion said it planned to pursue strategic alternatives for its wireless chip business. At the time, the company said it planned to continue to support its wireless customers. It did not elaborate, but some believe that the company was looking to sell the unit.

It appears that Spansion is not selling the entire wireless unit. Now, Spansion plans to downsize the wireless unit. ''We will maintain a portion of wireless,'' Nation said.

Going forward, wireless will also have a slightly different focus. Spansion sells NOR-based devices for handsets and other products. In the past, the company attempted to be all things to all customers with products, based on leading-edge processes, he said.

Now, the company will continue to sell NOR devices for wireless, but it will ''move away from the leading-edge,'' he said.

As a result, Spansion appears to be falling further behind rival Numonyx and others in the process race. However, even though its lags at certain nodes, Spansion believes that its MirrorBit NOR technology is still technically superior over products from its rivals.

At the leading-edge, Spansion sells NOR devices based on 65-nm technology. The company did not comment on its plans for 45-nm and beyond, although Nation said it will slow the pace of process R&D at the high end.