Chip maker Atmel, based here, will seek to sell its wafer fabrication facilities in North Tyneside, U.K. and Heilbronn, Germany.

Through a combination of voluntary resignations, attrition and other actions, Atmel expects a reduction in its non-manufacturing workforce of approximately 300 employees, or 10 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.

Through better utilization of its remaining wafer fabs and the expansion of its foundry relationships, Atmel will significantly reduce manufacturing costs.

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.

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.

"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."

By: DocMemory
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