I find it ironic that data-storage companies are suffering even as the human race generates mind-boggling amounts of data that need storing. Of course, the chip biz is cyclical, so we can hope that things turn around before too long.

At Spansion (NASDAQ:SPSN), a manufacturer of NOR flash memory (generally used to store code in electronic devices), intense competition and steep price declines powered disappointing results during its first fiscal quarter. Revenue increased 12% from the previous year, reaching $628 million. Unfortunately, gross margins plummeted to 14%, from 19% last year. As a result, Spansion's operating loss nearly doubled, to $70.4 million, and the net loss totaled $75 million, or $0.56 per share.

The best Spansion can say this quarter: It did better than Intel (NASDAQ:INTC). Intel's Flash Memory Group, which includes both NOR and NAND flash memory, generated an impressive operating loss of $283 million on revenue of $469 million. Of course, Intel is still investing heavily in its NAND flash production operations with Micron (NYSE:MU), so its NOR flash performance may not be as bad as the numbers indicate.

Unfortunately, pricing may not improve right away. Spansion stated that things really fell apart late in the quarter. As a result, it's migrating to 300mm-wafer production and working to cut costs.

Spansion has high hopes for a product named MirrorBit Eclipse, which integrates three types of flash memory on a single semiconductor chip. I believe it may have promise, but its fortunes will probably remain dominated by the NOR flash market, and negatively affected by rival NAND flash manufacturers, for some time -- and that ain't good.

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Fool contributor Dan Bloom owns shares of Intel. He welcomes your comments, especially in haiku form. The Fool's disclosure policy never runs out of space.