TOKYO — The Japanese unit of flash memory maker Spansion Inc. said it filed for bankruptcy protection on Tuesday with total liabilities of $810 million, the latest victim of the chip sector's global downturn.

Sharp price falls and weak demand in the chip market, which are also hurting bigger rivals Samsung Electronics Co and Toshiba Corp, have prompted Spansion Inc itself to restructure operations and explore a possible sale.

The sector's worst-ever slump had pushed Germany's Qimonda AG to file for insolvency.

U.S.-based Spansion Inc, the world's third-biggest flash memory maker owned 11.4 percent by Fujitsu Ltd and 8.7 percent by Advanced Micro Devices, said the Japanese unit's filing does not "materially" affect its global operations.

It added that the unit, Spansion Japan, had sufficient cash on hand to meet its short-term working capital needs.

"We intend for Spansion Japan to continue to operate throughout the restructuring period," Spansion Inc President and CEO John Kispert said in a statement.

Spansion Inc is the world's biggest maker of NOR-type flash memory, which competes against the more popular NAND-type flash memory made by Samsung and Toshiba.

Fujitsu also played down any impact on its chip sales.

Analysts said the failure of Spansion Japan, the biggest by a manufacturer in Japan this year, would have little effect on other flash memory makers.

"The NOR flash market is gradually shrinking as NAND flash improves performance and replaces NOR chips," said Park Hyun, an analyst at Prudential Investment & Securities in Seoul. "Samsung makes NOR flash chips but their portion of overall sales is limited and Samsung isn't very aggressive in expanding NOR."

Used in mobile phones, NOR-type memory typically reads stored data slightly faster than NAND type memory, while NAND writes new data into storage faster than NOR.

Spansion Japan employs 1,350 workers, or about 14 percent of Spansion Inc's group workforce, according to research firm Teikoku Data Bank. It had sales of 179.7 billion yen ($1.96 billion) in 2006.

Spansion Inc, weighed down by long-term debt of about $1.5 billion, has been restructuring its operations with workforce cuts and sales of assets.

Writing down obsolete chip equipment and a tumble in the share price of Spansion Inc hurt Fujitsu's earnings last business year. (Reporting by Sachi Izumi, Mayumi Negishi, Nathan Layne in Tokyo, and Rhee So-eui in Seoul; Edited by Brent Kininmont)

Copyright 2009 Reuters.