October 9, 2007 – Atmel Corp. has finalized agreements to sell off its 200mm wafer facilities in North Tyneside, UK, part of its recent push to strategic transition to a “fab-lite” business model which also targets operations in Germany and Texas.

The UK site actually will be divided between two buyers. TSMC will take the 200mm tools for $82M, saying the equipment may find its way to one of its China facilities to support expansion in the next year (other terms were not disclosed). TSMC has been pressing to add 200mm capacity as its own capabilities are being stretched to the limit.

Meanwhile, the buildings and land encompassing the North Tyneside site will be sold to Highbridge Business Park Ltd. for $124 million in cash.

Atmel says it will actually lose $10 million on the deals ($40M in gains, negated by $50M in restructuring charges), but expects the transaction will be approximately neutral on a cash-flow basis as it eliminates $35 million of debt and the recognition of other financial charges (i.e. leasing obligations). The company says manufacturing will continue at North Tyneside through 1Q08 while production is shifted to other sites in Colorado and France and to external foundry partners.

Getting the North Tyneside facilities off Atmel’s books will be a positive move, notes American Technology Research analyst Doug Freedman — it was only at ~50% capacity utilization, and the company can get higher loadings at its other sites, while reducing its percentage of expenses in Europe vs. overall to the low-40% range.

Freedman thinks Atmel’s next move will be to sell its German fab, a “very specialized” 150mm fab producing high-voltage and RF products for the auto market, which will further reduce headcount and expenses, improve overall manufacturing utilization rates. “