Atmel may cut 210 jobs in France

The San Jose-based company has made proposals to the French works council on the potential redundancies of approximately 210 employees from its Rousset fab and Nantes design locations.

By Suzanne Deffree, Managing Editor, News -- Electronic News, 8/1/2008

Atmel Corp may soon cut its France-based manufacturing and design workforces.

The San Jose-based company announced in its Q2 earnings statement that it has made proposals to the French works council on the potential redundancies of approximately 210 employees from its Rousset and Nantes locations.

Atmel further said it is also reviewing potential changes in its business and asset portfolio throughout its worldwide operations, including those located in Europe, in order to enhance its overall competitiveness and viability.

“While Atmel continues to be heavily exposed to adverse changes in the dollar-Euro exchange rate, the progress we've made through our asset divestitures and restructuring initiatives have reduced this impact substantially,” Steven Laub (pictured, left), Atmel's president and CEO, said on the company’s quarterly call Thursday afternoon. “Furthermore, Atmel continues to weather ways to safeguard stability to compete in the market. In this context, French management is commencing a consultation procedure with the works councils in France in relation to potential redundancies in the operations in Rousset, and Nantes, France. Atmel is also continually viewing potential changes in its business and asset portfolio to add its full wide operations included what's located in Europe, in order to enhance its overall competitiveness and viability.”

Atmel operates a fab in Rousset and announced the sale of its fab in Nantes in 2005. The company maintains a presence in Nantes with the design of microcontroller products for the automotive and industrial markets along with its space related activities.

Revenues for Atmel’s Q2 were $420.9 million, a 2.4% sequential increase and a 4.1% increase year over year. Microcontrollers, a core business for the company, deliver a 9% sequential revenue increase and a 29% revenue increase compared to the year-ago quarter. The company credited its AVR, standard ARM, and touch-sensing products for the growth.

Net loss for the June quarter was $4.9 million and compared to net income of $6.8 million in Q1 and net income of $0.7 million for the year-ago quarter.

Laub said during the Q2 call that fab utilization is at about 95%, an increased utilization rate on Atmel sale of its North Tyneside, England, fab. That sale was announced in late 2006, when Atmel also announced it would shutter its Heilbronn, Germany, fab, cutting approximately 1,300 jobs total.

Laub said on the call that so long as the business environment remains steady, utilization of the fabs will remain around the 95% level. He further reminded that Atmel uses external foundries for 5% of its production.

“One of the things that's happened with respect to the closure and the sale of the assets in North Tyneside is we've moved the production from that facility to both the Colorado facility as well as we to Rousset, France, fab and what's that's done it allowed us to run those fabs at a much higher utilization level,” Laub said. “We expect that going forward as our requirements go up we will be moving more and more production to outside foundry. But what we're seeing is really the benefits of the increased utilization and wafer costs, because of that in our existing facilities.”

Atmel did not estimate associated costs with the possible France-base job cuts. Laub approximated that the work council discussions will take two to three months.

Atmel currently employs approximately 7,000 employees worldwide.