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Atmel Corporation is seeking to sell two fabs and reduce its workforce by approximately 1,300 in an effort to become profitable and move to a fab-lite business model. The move is intended to gain higher fab utilization rates at its remaining facilities while using foundries for a larger portion of its IC requirements.

Atmel is therefore seeking to sell its fabs in North Tyneside, UK and Heilbronn, Germany. 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 two fabs. Atmel anticipates entering into a transition sourcing agreement with the eventual buyers of the wafer fabrication facilities.
   
"These initiatives follow a thorough analysis of the company's operations and strongest opportunities for growth," said Steven Laub, Atmel president and CEO. "While this decision was difficult given the company's many dedicated employees, these actions are essential to better position Atmel to compete and drive value for our shareholders. Focusing on our core business competencies, expanding our foundry relationships and the adoption of a fab-lite model are the right strategies for Atmel to better serve our customers, reduce manufacturing costs and enhance shareholder value."

The North Tyneside facility was initially acquired from Siemens, which had been shuttered for several years after exiting the DRAM memory market and spinning-off its memory division. The fab is regarded as the most advanced 200mm facility in the UK.