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Electronics Production | October 01, 2008

Atmel to sell German wafer operations

Atmel has reached an agreement with Tejas Silicon Holdings (UK) regarding the sale of the Company's wafer fabrication operation in Heilbronn, Germany.
The sale is subject to customary closing conditions and is expected to be completed in the fourth quarter of 2008. Atmel had previously announced its intention to sell this facility as part of its strategic restructuring initiatives. It follows the previously completed sales of Atmel's North Tyneside, U.K. and Irving, Texas wafer fabrication facilities. With these transactions and the progress on the Company's other restructuring initiatives, Atmel continues to increase its focus on and investment in the Company's high-growth, high-margin proprietary product lines.

To ensure a seamless transition for its customers, Atmel and TSH(UK) will enter into a supply agreement whereby Atmel will continue to procure products from the Heilbronn fab over a three year period. During this time, production will also be redeployed to the Company's other manufacturing facilities as well as to external foundries, resulting in substantially reduced manufacturing costs beginning in approximately 18 to 24 months.

Under the terms of the agreement, TSH(UK) has agreed to acquire Atmel's wafer fabrication operation, including equipment, other assets and certain employee related liabilities. TSH(UK) will also lease the facility and license fab process technology. The transaction is expected to be essentially neutral to Atmel on a cash flow basis, excluding transaction related costs. Atmel expects to record charges of approximately $5 million to $10 million associated with impairment and a loss on the sale of assets, to be incurred over the third and fourth quarters of 2008. As a result of this transaction, approximately 300 Atmel employees directly associated with fab operations and other support functions will become a part of TSH(UK).

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