Microchip has completed its acquisition of Atmel, but has reduced the purchase price by an undisclosed amount in light of what it calls ‘disappointing performance’ since it struck the deal.

Steve Sanghi, pictured, Microchip’s chairman and CEO, said: “The performance of Atmel since we engaged in discussions in August 2015 has been disappointing. We believe the large drop in Atmel revenue in the March 2016 quarter is likely the result of an inventory correction in the distribution channel as distributors reduced inventory levels, overall weak business conditions, and concerns on the part of distributors surrounding the impact of the sale of Atmel to Microchip. We took some of this weakness into consideration in dropping the final acquisition price from our original offer.”

According to Microchip, Atmel’s net sales for the quarter ended 31 March 31 2016 are expected to be around $220million – more than 15% lower than at the mid point of the previous quarter.

Microchip also noted that it is treating Atmel’s mobile touch business as an asset held for sale. However, touch technology sold to automotive and industrial customers will be retained.

“While the starting point of the size of Atmel’s business is smaller than we originally modelled, it does not fundamentally change the value proposition to Microchip. We understand Atmel’s business well and plan to rapidly integrate Atmel into Microchip,” Sanghi added.

Meanwhile, Microchip expects net sales for its fiscal fourth quarter to be more than $552m.

By: DocMemory
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