SAN FRANCISO—In a complex arrangement that in effect rids the company of the German manufacturing operation it has been trying to sell for two years, Atmel Corp. said Tuesday (Sept. 30) that a U.K. company has agreed to buy the fab's equipment and lease the facility from Atmel.

The agreement—financial terms of which were not disclosed—also includes the transfer of the facility's employees and a three-year supply agreement, Atmel said. The company plans to take charges of up to $10 million as the result of the sale.

Tejas Silicon Holdings Ltd. has agreed to acquire the Heilbronn, Germany fab operation, including equipment, but will lease the facility and license fab process technology from Atmel (San Jose, Calif.). About 300 Atmel employees associated with fab operations and other support functions will become a part of Tejas Silicon, Atmel said.

Atmel and Tejas Silicon will also enter into a supply agreement whereby Atmel will continue to procure products from the Heilbronn fab over a three-year period, Atmel said. During this time, production will also be redeployed to Atmel's other manufacturing facilities and external foundries, the company said.

Atmel said it expects to record charges of about $5 million to $10 million in the third and fourth quarters of 2008 due to impairment and a loss on the sale of the equipment.

"It's not unusual in this type of market to incur some charges as the result of the sale of equipment," said Robert Pursel, Atmel's director of investor relations. Pursel added that the charges also include legal fees and transaction fees.

Atmel announced in 2006 it would sell the Heilbronn fab as part of a restructuring that also included the sale of the company's fabs in North Tyneside, U.K. and Irving, Texas.

In October 2007 Atmel sold the equipment from the North Tyneside fab to Taiwan Semiconductor Manufacturing Co. (TSMC) and sold the facility to developer Highbridge Business Park Ltd. for a combined $124 million. In May 2007 company sold the Irving fab —which was not yet equipped—to Maxim Integrated Products Inc. for about $38 million.

Pursel said Atmel choose to lease to fab rather than sell it outright because the company has other ongoing activities at the Heilbronn facility. According to Atmel's 2007 annual report, Heilbronn is also home to research and development, marketing, product design and final product testing for the company. The report states that 74 percent of the facility's square footage is already leased to other companies.