Atmel Board of Directors Rejects Unsolicited Proposal From Microchip Technology and ON Semiconductor

Determines Proposal is Inadequate in Multiple Respects, Including Value, Conditionality and Complexity Expects Continuing Progress on Transformation Plan to Provide Superior Value to Atmel Stockholders

SAN JOSE, Calif., Oct. 29 /PRNewswire-FirstCall/ -- Atmel(R) Corporation (NASDAQ: ATML) today announced that, after careful consideration, its Board of Directors has unanimously determined that the October 1, 2008, unsolicited proposal from Microchip Technology Inc. (NASDAQ: MCHP) and ON Semiconductor Corporation (NASDAQ: ONNN) is inadequate in multiple respects, including value, conditionality and complexity, and is not in the best interests of Atmel's stockholders.

"Atmel's Board has determined that Microchip and ON's highly conditional proposal significantly undervalues Atmel and would deprive Atmel stockholders of the greater value that can be achieved through the continued execution of the Company's transformation plan," said David Sugishita, Chairman of Atmel's Board of Directors.

Steven Laub, Atmel's President and Chief Executive Officer, commented, "Atmel's Board and management are committed to enhancing stockholder value. This commitment has driven the decisive actions we have taken to improve and restructure nearly every aspect of Atmel's operations. These initiatives are well underway and are just beginning to unlock the value inherent in Atmel. Indeed, our outstanding third quarter results announced today demonstrate the clear progress we are making. We will continue to take all appropriate steps, including selling or shutting down those businesses that do not meet our financial or strategic objectives, to ensure that we build on this momentum and realize Atmel's full potential."

Following is the text of the letter that was sent today to Steven Sanghi, Chairman, President and Chief Executive Officer of Microchip Technology, and to Keith Jackson, President and Chief Executive Officer of ON Semiconductor:

    Dear Messrs. Sanghi and Jackson:

    We received your unsolicited, non-binding public proposal dated October 1,
    2008, to engage in negotiations for a three-way agreement to acquire Atmel
    for $5.00 per share in cash, subject to numerous conditions, including the
    sale of assets, due diligence and financing.  After a comprehensive
    review, and with advice from our outside financial and legal advisors,
    Atmel's Board of Directors has concluded that your proposal is inadequate
    in multiple respects -- it significantly undervalues Atmel, is
    unacceptably conditional and subject to significant execution risk.

    While we appreciate your recognition of Atmel's superior product and
    technology portfolio, we believe your proposal is opportunistic and not
    consistent with the Atmel Board of Directors' objective of maximizing
    stockholder value.  Accordingly, the Board has unanimously rejected your
    proposal as not in the best interest of Atmel's stockholders.

    We believe it is important to set the record straight with respect to our
    discussions with you prior to October 1, 2008.  Despite your claims,
    Microchip never made a proposal to Atmel prior to its October 1
    unsolicited proposal.  You also falsely stated during your joint investor
    call that we told you that "the Board of Atmel did not want to do this
    deal under any circumstances, under any terms, at this time."  What we
    both know really occurred is that Microchip sought confidential and
    sensitive due diligence information for a possible multi-party transaction
    without specifying a price or any other terms.  Your publicly announced
    October 1 proposal was the first time Microchip disclosed to us a proposed
    price, structure, ON Semiconductor's involvement, and the many significant
    associated conditions, including the financing required by ON.  Atmel's
    Board takes its fiduciary duties seriously.  Given the risks,
    uncertainties and competitive issues of your approach, we believe the
    interests of Atmel's stockholders, employees and customers will be better
    served by continuing to pursue our transformation plan that we expect will
    generate substantially greater stockholder value.

    Atmel's Board has carefully considered your proposal and has determined
    that it is inadequate in multiple respects.  In arriving at this
    conclusion, the Board considered that:

    Atmel is currently implementing an aggressive transformation plan,
    improving both Atmel's cost structure and product focus.  Contrary to your
    assertions, we are achieving significant success in this regard.

    -- Non-core manufacturing facilities have been shut down and sold,
       reducing Atmel's fabs from five to two by the end of 2008.  We have
       divested or shut down 14 non-core product lines, while consolidating or
       streamlining others.  We have also implemented an 18% reduction in the
       Company's workforce and expect to realize more than $125 million of
       cost savings in 2008, well in excess of our target of $80 million to
       $95 million.
    -- As a result of these and other actions still underway, Atmel is
       achieving stronger financial performance as evidenced by the 400 basis
       point improvement in gross margins over the last two quarters alone.
    -- In addition, our microcontroller business is achieving substantial
       revenue growth, market share gains and margin expansion.  Indeed, our
       microcontroller growth rate of 21% for the September quarter year-over-
       year substantially exceeded that of Microchip's at 5.5%.
    -- We expect that the combination of normalizing currency trends and the
       continued benefits from our ongoing restructuring will result in
       further improvement in our operating and financial performance.

    Your unsolicited proposal is highly opportunistic and delivers neither
    fair nor full value to Atmel's stockholders.  Given our progress and the
    actions Atmel's Board and management are continuing to take, we are
    confident that Atmel stockholders will realize greater value through the
    continued execution of the Company's strategic plan.

    -- Microchip and ON's proposal is clearly an opportunistic attempt to
       acquire our leading technology and product portfolio at a time of value
       compression in the equity markets and just as our progress is becoming
       more visible in the Company's financial results.
    -- Simple calculations show that your proposal significantly undervalues
       the Company.  Based on the value that ON has ascribed to Atmel's
       RF/Auto and non-volatile memory business units, Microchip would be
       acquiring Atmel's microcontroller business at a substantial discount to
       its true value, despite accelerating revenue growth, market share gains
       and margin expansion.  As stated in your joint investor call "Atmel has
       strong momentum in proprietary AVR architecture."
    -- In your joint investor presentation, you identified "Significant
       opportunities to drive operational synergies across COGS, SG&A and
       R&D."  However, the proposal fails to provide any value to Atmel
       stockholders for the substantial synergies that you anticipate

    Microchip and ON's complex proposal is highly conditional and subject to
    significant execution risk.  Among other things, the proposed transaction
    depends on Microchip and ON's ability to agree to terms and close a
    significant, separate purchase and sale transaction.

    -- The proposal requires Microchip and ON to reach a definitive agreement
       on price, as well as a complex separation of Atmel's businesses, which
       today share a number of significant functions.  There is no  assurance
              that  such  an  agreement  can  be  reached.
        --  The  proposal  requires  Microchip  and  ON  to  each  receive  necessary
              regulatory  clearance  for  their  acquisitions  of  competing  businesses,
              obtain  necessary  financing,  and  meet  all  other  closing  conditions
              before  any  transaction  with  Atmel  can  close.    There  is  no  assurance
              such  financing  will  be  received,  or  that  any  other  conditions  of  the
              complex  three-way  transactions  will  be  met,  and  if  they  are,  no
              certainty  as  to  how  long  they  will  take.
        --  The  proposal  is  subject  to  due  diligence  by  Microchip  and  ON,  and  would
              require  Atmel  to  provide  major  competitors  with  access  to  Atmel's
              sensitive,  confidential  information  with  no  assurance  that  a
              transaction  will  be  entered  into  on  acceptable  terms.    Microchip  and
              ON's  inadequate  and  highly  conditional  proposal  provides  no  basis  to
              grant  such  access.

        The  proposal  requires  ON  to  obtain  hundreds  of  millions  of  dollars  of  new
        financing  at  a  time  when  the  credit  markets  are  essentially  closed.

        --  You  claimed  in  your  letter  and  joint  investor  call  that  ON  would
              finance  part  of  its  purchase  of  Atmel's  non-volatile  memory  and  RF  and
              Automotive  businesses  through  "borrowing  of  approximately  $260  million
              under  ON  Semiconductor's  existing  credit  facility."    Our  review
              indicates  that  ON  has  no  such  commitment  under  its  existing  credit
              facility  to  provide  additional  financing.    ON's  existing  facility
              merely  allows  ON  to  seek  to  raise  a  new  and  separate  $260  million
              facility.    ON  has  acknowledged  that  it  will  need  financing  even  beyond
              that,  which  may  require  refinancing  the  existing  credit  facility.    This
              lack  of  any  financing  commitment,  together  with  your  misstatements
              regarding  the  same,  are  of  particular  concern  given  the  current
              uncertain  economic  and  credit  environment.

        In  closing,  we  believe  your  stated  confidence  in  your  proposal  is  very
        much  misplaced.    We  share  your  excitement  about  Atmel's  leading  product
        and  technology  portfolio  and  our  talented  employee  base.    Based  on  these
        strengths,  the  solid  plan  we  have  in  place  and  the  actions  we  are
        continuing  to  take  to  fully  unlock  the  value  of  the  Company,  we  believe
        your  opportunistic  proposal  significantly  undervalues  Atmel  and  would
        deprive  Atmel  stockholders  of  the  greater  value  that  can  be  achieved
        through  the  continued  execution  of  the  Company's  transformation  plan.


        /s/  Steven  Laub

        Steven  Laub
        President  and  Chief  Executive  Officer


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