Atmel Corp.’s launch of a programmable microcontroller on the eve of Embedded Systems Conference makes perfect sense, given the company’s effort to sell off traditional ASIC/FPGA assets. The company has added 200k gates of metal-programmable cell fabric to an ARM7 core, and claims that the $75,000 NRE will make a customized controller profitable at volumes as low as 10,000 units. Berniard Cole at Embedded.com says this should position the architecture directly against FPGAs and traditional ASICs.

He’s right, assuming certain volumes, conditions, and features. In fact, we should expect the likes of Freescale, ST, and Renesas to offer a new category of “FPGA killer” using a new form of microcontroller SOC architecture. Some wags might suggest that existing higher-end MCUs with programmable blocks for communication or signal-processing functions perform the same task.

The difference is in the up-front design methodologies. Atmel assures commonality of design tools such as compilers and real-time OS’s for its standard ARM controllers and the new CAP7L. The company also promises royalty-free licensing of the ARM IP. Customers need to provide RTL netlists to Atmel, so there will be an opportunity to optimize tools from the traditional EDA world for this new special sub-class of programmable microcontroller.

Atmel has taken a bold move by bringing NREs below $100,000 and eliminating royalty fees for the ARM block. Worst case (for the vendor, not the user), this could spark a cost-slashing stampede among both microcontroller and traditional ASIC vendors that severely erodes profit margins for everyone. Best case, Atmel may have created a new class of programmable product that will shake up the business plans of the MCU vendors, if not FPGA vendors as well.