September 30, 2008

Atmel Announces Sale of Manufacturing Operation in Heilbronn, Germany

SAN JOSE, Calif., Sept 30, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- Atmel(R) Corporation (Nasdaq: ATML) today announced that it has reached an agreement with Tejas Silicon Holdings (UK) Limited ("TSH(UK)") for the sale of the Company's wafer fabrication operation in Heilbronn, Germany. The sale is subject to customary closing conditions and is expected to be completed in the fourth quarter of 2008. Atmel had previously announced its intention to sell this facility as part of its strategic restructuring initiatives. It follows the previously completed sales of Atmel's North Tyneside, U.K. and Irving, Texas wafer fabrication facilities. With these transactions and the progress on the Company's other restructuring initiatives, Atmel continues to increase its focus on and investment in the Company's high-growth, high-margin proprietary product lines.

"This sale is another positive step forward in our efforts to rationalize manufacturing capacity and increase shareholder value," said Steven Laub, Atmel's President and Chief Executive Officer. "We are pleased with the progress we are making in enhancing Atmel's competitive position and improving our financial strength. In addition, I would like to thank our Heilbronn employees who will become a part of TSH(UK) for their outstanding service and dedication to Atmel."

To ensure a seamless transition for its customers, Atmel and TSH(UK) will enter into a supply agreement whereby Atmel will continue to procure products from the Heilbronn fab over a three year period. During this time, production will also be redeployed to the Company's other manufacturing facilities as well as to external foundries, resulting in substantially reduced manufacturing costs beginning in approximately 18 to 24 months.

Under the terms of the agreement, TSH(UK) has agreed to acquire Atmel's wafer fabrication operation, including equipment, other assets and certain employee related liabilities. TSH(UK) will also lease the facility and license fab process technology. The transaction is expected to be essentially neutral to Atmel on a cash flow basis, excluding transaction related costs. Atmel expects to record charges of approximately $5 million to $10 million associated with impairment and a loss on the sale of assets, to be incurred over the third and fourth quarters of 2008. As a result of this transaction, approximately 300 Atmel employees directly associated with fab operations and other support functions will become a part of TSH(UK).

About Atmel

Atmel is a worldwide leader in the design and manufacture of microcontrollers, advanced logic, mixed-signal, nonvolatile memory and radio frequency (RF) components. Leveraging one of the industry's broadest intellectual property (IP) technology portfolios, Atmel provides the electronics industry with complete system solutions focused on consumer, industrial, security, communications, computing and automotive markets.

Safe Harbor for Forward-Looking Statements

Information in this release regarding Atmel's forecasts, outlook, expectations and beliefs are forward-looking statements that involve risks and uncertainties. These statements include statements about Atmel's restructuring initiatives, expected restructuring charges, the timing of actions related to the sale of the Heilbronn fab, post transaction customer and supply arrangements, and strategies. All forward-looking statements included in this release are based upon information available to Atmel as of the date of this release, which may change, and we assume no obligation to update any such forward-looking statements. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. Factors that could cause or contribute to such differences include general economic conditions; the inability to realize the anticipated benefits of our recent strategic transactions, restructuring plans and other initiatives in a timely manner or at all; unanticipated costs and expenses or the inability to identify expenses which can be eliminated; our ability to complete the transactions in Heilbronn according to the anticipated schedule; the risk of failing to obtain any regulatory approvals or satisfy other conditions to the transaction; the risk that the transaction will not close or that closing will be delayed; difficulties encountered in the divestiture; and other risks detailed from time to time in Atmel's SEC reports and filings, including our Form 10-K for the year ended December 31, 2007, filed on February 29, 2008, and our subsequent Form 10-Q reports.

     Investor Contact                   Media Contact
     Robert Pursel                      Sharon Stern / Sarah Schupak
     Director of Investor Relations     Joele Frank, Wilkinson Brimmer Katcher
     Atmel                              212-355-4449

SOURCE Atmel Corporation

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