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Electronics Production | December 13, 2006

Atmel is looking to sell European<br>plans to reduce 1300 employees

Atmel Corporation today announced strategic restructuring initiatives designed to enhance profitability, accelerate the company's growth and reduce costs.

Atmel plans to redeploy resources to accelerate the design and development of products that target expanding markets and is halting development on lesser, unprofitable, non-core products. Atmel will seek to sell its wafer fabrication facilities in North Tyneside, United Kingdom and Heilbronn, Germany. These actions are expected to increase manufacturing efficiencies by better utilizing remaining wafer fabrication facilities while reducing future capital expenditure requirements. Through better utilization of its remaining wafer fabs and the expansion of its foundry relationships, Atmel will significantly reduce manufacturing costs and continue to design and develop innovative new products utilizing world-class manufacturing facilities. The company anticipates cost savings in the range of $70 million to $80 million in 2007 reaching an annual rate of $80 million to $95 million by 2008. Included in the cost savings is approximately $55 million per year resulting from the expected sale of the wafer fabrication facilities. Through a combination of voluntary resignations, attrition and other actions, Atmel expects a reduction in its non-manufacturing workforce of approximately 300 employees, or ten percent. The company anticipates headcount to be reduced by approximately 1,000 additional employees upon completion of the sales of the North Tyneside and Heilbronn wafer fabrication facilities. As a result of the initiatives announced today, the company estimates it will record one-time restructuring and impairment charges in excess of $200 million in the fourth quarter of 2006 for fixed asset write-downs, severance and other expenses associated with the restructuring. A significant portion of these non-recurring charges relate to the non-cash write-down of the North Tyneside manufacturing facility Atmel intends to sell.
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