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Atmel Corporation

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Atmel Corporation:

Atmel Corporation is a U.S. based semiconductor manufacturer that focuses on memory, microcontrollers, radio frequency products, and application specific devices. Atmel supplies products tailored for the consumer, communications, computer networking, industrial, automotive, aerospace, and military sectors. Over the last decade, Atmel has begun to focus more and more on their line of microcontroller products.

Company History:

Atmel Corporation was founded in 1984 by George Perlegos who noted the market potential for non-volatile memory chips while working for Intel during the 1970’s and 1980’s. Perlegos’ gained valuable experience in starting a business as the co-founder of Seeq Technology in 1981, also a memory chip manufacturing company. Perlegos’s stay at Seeq Technology was short, but allowed him to lay the ground work for Atmel, which stood for Advanced Technology for Memory and Logic.

Atmel started by focusing on designing memory chips for niche markets where they could leverage their small size and ability to quickly develop chips. One of Atmel’s focus areas in the early years was designing memory chips that used less power than their competitor’s solutions, an important factor for battery powered equipment. Atmel’s design skills and engineering talent were part of the formula for their early success, but Perlegos’s laid exceptional groundwork during his time at Seeq Technology, which let Perlegos start Atmel with only $30,000 in funding. Perlegos arranged for a design contract with General Instrument for $5.1 million where GI would manufacture Atmel’s designs in return for an ownership stake in Atmel. A similar deal was struck with Sanyo Semiconductor, enabling Atmel to enter the semiconductor industry without the normal capital costs of creating a semiconductor fabrication facility.

Atmel continued to keep costs low, move quickly, and respond to customer demand for new products that attracted a customer base made of some of the largest electronics companies in the world, including Motorola, Nokia, and Ericsson. Unlike other manufacturers, Atmel both responded to and catered to the needs of its customers in developing their products. This behavior was encouraged and reinforced by management and the corporate structure of Atmel. Perlegos learned the importance of allowing employees to take initiative in responding to situations and customers and kept the separation between employees and top management very low, with at most two layers between any employee and top management. The reduced layers of management helped keep Atmel a fast moving company that could quickly move in any direction that appeared to hold a lucrative market.

Atmel was profitable from its first year of operation throughout the 1980’s thanks in part to the deals with General Instrument and Sanyo. However, in 1987, three years after the company was formed, Intel sued Atmel for patent infringement which forced Atmel to redesign its chips around Intel’s patent. The redesign forced Atmel to design a better chip and grow their technological lead over their competitor, but Atmel also began working on a memory chip that would directly compete with Intel’s memory focus, Flash memory. Atmel’s design was faster than Intel’s and used less power, giving Atmel a new market and further enhancing their reputation as excellent chip designers.

Atmel remained a fabless manufacturer until 1989, when Perlegos pursued venture capital funding to purchase a fabrication facility from Honeywell in Colorado Springs for $60 million. Atmel spent another $30 million to upgrade the facility which became their primary location for manufacturing. The purchase of the Honeywell fab marked a turning point for Atmel with growth continuing unabated expansions to new markets through acquisition and continued R&D became a large component of growth. After going public in 1991, Atmel acquired Concurrent Logic, a field programmable gate array manufacturer and expanded their manufacturing facility in Colorado Springs. Atmel’s growth continued throughout the 1990’s, with Atmel reinvesting nearly 50% of their revenue in to research and development; nearly double the industry standard of 35%. In 1994, Atmel purchased Seeq Technologies, the company Perlegos helped co-found before he started Atmel.

In 1996, Atmel expanded internationally with the acquisition of European Silicon Structures and Digital Research in Electronic Acoustics. The European expansion continued with the formation of a design team based out of Norway and fabrication facilities in France. In 1998, Atmel purchased part of TEMIC, which provided them with an additional fab in Germany and one more in France. With the abundance of fabs in Europe, Atmel’s expansion slowed and a consolidation followed in 2005.

In 2008, Atmel received an unsolicited offer from Microchip Technology and ON Semiconductor. The offer was eventually rejected and the companies gave up on their takeover attempt. Today, Atmel is has over $1 billion in annual revenue, with over 60% of their revenue from microcontrollers and is the largest supplier of touch sensing solutions.

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