Atmel Corporation (ATML) recently completed the sale of its wafer fabrication operation in Rousset, France to LFoundry GmbH.
The sale was earlier approved by employees of the Rousset fab and the Works Council of Atmel Rousset. Over 750 employees employed at the Rousset fab will now be a part of LFoundry’s team. Atmel expects to record a loss of $110 million on the sale of this fabrication operation.
Atmel will purchase wafers under a supply agreement from LFoundry for up to four years.
Atmel has been in the process of transforming its manufacturing operations to a fab-light business model. The company has already reduced its wafer fabrication facilities from five to one and successfully divested/closed down approximately 14 non-core product lines.
Management has been taking steps to streamline its workforce and improve profitability in response to the challenging economic environment. These actions include selling non-core wafer fabrication operations and consolidating or eliminating numerous product lines.
The company will turn into a purely microcontroller-based company and will focus on its core microcontroller and touch products. Management believes that this move will improve its cost structure and unlock value.
Atmel had earlier announced that it received an offer from privately-held INSIDE Contactless to purchase its Secure Microcontroller Solutions (also known as the smartcard business) based in Rousset, France and East Kilbride, U.K.
As part of the proposed transaction, Atmel would make a minority investment in INSIDE. In addition, INSIDE would enter a multi-year supply agreement to continue sourcing wafers from the fabrication operation in Rousset that Atmel recently agreed to sell to LFoundry GmbH.
The deal remains on track and the transaction is expected to close in the second half of 2010.
Based in San Jose, California, Atmel designs and manufactures microcontrollers, capacitive touch solutions, advanced logic, mixed-signal, nonvolatile memory and radio frequency components.
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