Updated from 4:58 p.m. EDT

SAN FRANCISCO --

Spansion

( SPSN) widened its net loss in the first quarter, as weak business conditions in China weighed on the company's results.

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But the money-losing chipmaker vowed to turn cash flow positive by the second half of the year, and cited opportunities to pick up market share amid a changing competitive landscape.

Shares of Spansion were off 1.4%, or 5 cents, at $3.40 in extended trading Wednesday.

The Sunnyvale, Calif., chipmaker posted a net loss of $118.5 million, or 85 cents a share, in the three months ended March 30, compared to a net loss of $49.5 million, or 37 cents a share in the year ago period.

Analysts polled by Thomson Financial were expecting EPS of negative 70 cents a share.

As expected Spansion reported revenue of $570 million, down 9% year-over-year. Spansion had initially projected that sales would range between $580 million and $640 million, but cut its estimates last week, citing a slowdown in China.

Spansion said Wednesday that sales in the Greater China region decreased $50 million sequentially, while sales in other regions were in line with expectations.

In an interview with

TheStreet.com

, CEO Bertrand Cambou attributed the weakness in China to the severe snowstorms that brought the country to a standstill in early February, causing widespread business disruptions.

"What you have is a big hole in middle of Q1," Cambou said.

Spansion makes a type of memory chip, dubbed NOR flash, which is used to store programming code in cell phones and other electronic devices. Prices of flash memory have been in freefall for months, pressuring the profitability of the various companies involved in the business.

Spansion said the blended average selling price of its chips increased 4% sequentially in the first quarter, as it shipped slightly lower average densities. Sales to Spansion's top five customers increased during the quarter, Spansion said.

And the company has recently signed a contract with a "top five account" with whom Spansion has historically done little business, Cambou said, which will result in very high shipments by the fourth quarter.

Cambou also stressed that he saw plenty of opportunity to continue taking market share as

Intel

(INTC) - Get Report

and

ST Microelectronics

(STM) - Get Report

merge their NOR flash assets into the

Numonyx

joint venture.

"Now they're going to have to worry about how to manage a company jointly," Cambou said. "To put two companies together is tough, they're going to find out."

As for staunching the flow of red ink at Spansion -- something analysts don't see happening for at least the next three years -- Cambou said the key was in how fast the company is able to ramp up its new 300mm chip factory in Japan.

He said the company currently projects that it will achieve breakeven performance -- on an operational basis -- this year, as the company turns cash flow positive in the second half of the year.

"That's based on getting SP1

the new Japanese fab productive and stopping to spend money, because right now we're spending a lot of money to ramp up that facility," he said.

Spansion projected that its gross margin would remain flat at 17% in the current quarter, while sales would be "up slightly." Analysts expected a 3% sequential sales increase to $588 million.

For the full year, Spansion said sales will be flat to up slightly compared to the $2.5 billion in 2007, higher than the $2.46 billion expected by analysts.