Atmel Corporation in France
Best in France Case Study
HEC MBA January 2005
Mr. Carastamatis, Mr. Maradan, Mrs. Seeber and Mr. Snowdon
Executive Overview
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Atmel Corporation overview
Atmel Products and markets
Why did Atmel come to France
Adaptation to France
Cross-border values
Human Factors
Essential Advices
Atmel Corporation Overview
• American Company created in 1984 by
George Perlegos (still the CEO)
• Atmel is a worldwide leader in designing and
manufacturing Integrated Circuits
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Turnover:
Employees worldwide:
Employees in France:
Headquarters:
1.5 B$ /year
8500
3500
San Jose (CA USA)
Atmel Corporation Overview
Contributors
• Mr. Bernard Pruniaux:
– CEO Atmel France, Corporate Vice-President ASIC Business Unit.
– Located in Aix-en-Provence, France.
– He has been with Atmel since 1995.
• Mr. Jeff Katz:
– Corporate Vice-President of Marketing.
– Located at the headquarters in San Jose, California USA.
– He has been with Atmel for 16 years.
• Mrs. Hanène Maupas:
– Sales Manager of the Consumer Business Unit.
– Located in Paris, France. She operates in Europe
– She has been with Atmel since 2001.
Atmel Products & Markets
Introduction
• Atmel manufactures a wide range of chips
• Main products are:
– Memory chips for handsets, computers or DVD players
– Microcontrollers for consumer and industrial products
– RF (Radio Frequency) systems for automotive and
telecom markets
– ASICs (Application Specific Integrated Circuits):
• Smartcard for GSM and banking cards
• Multimedia products like ADSL routers, digital cameras or
sensors
Atmel Products & Markets
Market Distribution
• Industry Sector Distribution in 2003
Secure/
Smart Card
Ics
10%
Industrial/
Military
24%
Automotive
8%
Consumer
12%
Telecoms
27%
PC
Peripheral/
Network
19%
Atmel Products & Markets
Business Areas Distribution
• Geographic Markets in 2003
Other
3%
North
America
18%
Asia
49%
Europe
30%
Atmel Products & Markets
French Operations
• Some figures in France:
– Revenues:
– Employees:
– Number of factories:
– R&D centers:
$95 M
3500
3
3
7% of total revenue
8500 worldwide
7 worldwide
8 worldwide
• Production in France focused in memories (Flash and
EEPROM), ASICs, RF chips:
– High-end products requiring advanced silicon factories
– The technology has been available in France a long time.
• Biggest Investments:
– 1 B$ in Rousset factory in 1998 to get one of the most
advanced factories in the world (8” factory)
– created more than 1300 jobs.
Why did it come in France
Chronology
• 1995: Atmel entered France
– With the acquisition of ES2, a French company based in
Rousset (Aix-en-Pce) with two factories and an R&D center
• 1998: New investment in France
– With the acquisition of Temic, adding a new site in Nantes, with
a factory and an R&D center
• 2000: New site investment
– With the acquisition of a joint venture ST/Thomson in
Grenoble, with a factory and an R&D center
• 2004-2007: R&D investment in France
– $500 M investment in Rousset to create a memory R&D center
– $100 M investment in Nantes to create an automotive R&D
center
Why did it come in France
Reasons
• Atmel searches globally for acquisitions that add the
desired product diversification
 They chose France primarily by chance, indeed…
• The technology was in France:
– In 1995, limited range of products was limited to memories
only (EEPROM and Flash) so it purchased ready technology
• Atmel was seeking business in Europe:
– where the market was growing
• Atmel wanted to enlarge its production capabilities:
– the ES2 factory in Rousset (near Aix-en-Provence) was one
of the very few 6” silicon factories in the world
Why did it come in France
Reasons for investing again
• Atmel keeps on investing because: WHY?
• French state provides many funds:
– In future R&D centers, subsidies will represent 25%
– And fiscal advantages are available to the company
• France has big micro-technology research centers:
– CEA (Commissariat à l’Energie Atmonique), LETI
– Local educational authorities (GRETA…)
• For the quality of workforce:
– Many semiconductor companies are implanted in France)
• Infrastructure is good:
– Now the main site in Europe (Rousset near Aix en Provence)
is connected with the TGV
Adaptation to France
Main Constraints
• Social approach of labor:
– Seen as the biggest constraint by Americans
– Example: American management was surprised by two
strikes occurring in the first years of the Rousset site
• (In)Flexibility of labor:
– The semiconductor industry is cyclic with boom periods
lasting 2 or 3 years then followed by big downturns,
however, the workforce must be maintained.
• Restrictive Labor Laws:
– virtually impossible to restructure business, 35 hour work
week, mandatory compensation schemes
• High taxes
Adaptation to France
Atmel strategy
• The American team always maintained the previous
management after acquisitions
– For instance, when it acquired ES2, the full French
management team stayed on.
• The mandatory compensation through bonuses in France
made adaptation necessary in all non-French businesses:
– Bonus system globally is based on the performance of the
company. Therefore when the industry slumped, bonuses
were cut at all locations except those in France since a
yearly bonus is contractually required
– Resentment among non-French units which meant the
company needed to find ways to make them feel
appreciated as well.
Adaptation to France
Costs and benefits
• Costs difficult to assess since the constraints are
considered as having also some pros
• Example 1: the flexibility of labor in the USA and in UK
installs a dynamic of instability.
 In France, employees are more loyal and remain longer
 True relationship building between employees and the
company (comparable to the faithfulness in marriage)
• Example 2: the social approach is balanced by the expertise
of people
• Example 3: the lack of flexibility is balanced by the
implication of the “collectivités” (Europe, State, Region..)
Adaptation to France
Key Benefits
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The product quality is high:
– But could be reproduced elsewhere
– And productivity is lower due to labor laws
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Incentives to keep facilities in France:
– Through local grants for expansion and integration of new
technology
– Depending on the location and whether it is designated by the EU
as a re-conversion area, Atmel receives EU grants to transform
production and the workforce.
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Some key market are in France:
– Example: key customers for smart card technology are located in
France and so is Atmel’s leading smart card facility
– However the location of this facility is historical, as the smart card
facility existed in France before Atmel acquired it.
Cross Border Values
Engineers’ vision
• Similar in that Atmel is innovative and a
pioneer in the integrated circuits world
• French engineers fit well with these
values:
 they are focused on products rather than
markets.
Cross Border Values
Managers’ vision
• Key values at Atmel: ethics and hard work
– High standard of business ethics in France compatible with North
America culture
• Different Work culture:
– in France restricted by laws and welfare expectations/traditions
• 35 hour work week, expectations for 5-6 weeks vacation
• Compared to the 40+ hour work week and 3-4 week vacation time
available in North America.
– Does not affect relations within the company
– Atmel management recognizes the differences and constraints
• Acquisition of French sites:
– Visits by HQ executives to instill the style and deliver objectives
– The French managers visits of HQ as “im-patriots” to transfer
technology and absorb business practices
– Each month site managers travel to HQ for the operations review
Cross Border Values
HR Vision
• Human organization constraints:
– More organizational than cultural
– On the spectrum ranging between “seat of the pants
management” to stifling bureaucratic, Atmel tends more
toward the former
– Atmel values results more than reports
– Current size enables a more dynamic flow rather than a
regimented flow of information to facilitate its progress
• Universal bureaucracy constraints:
– Atmel has encountered the bureaucratic style in Europe as
well as in America
– Atmel has been successful in reducing the level of
bureaucracy in acquired companies by focusing the
deliverables of the business on results. This focus has
been applied to all locations independent of geography.
Human Factors
Relations
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Local (French) management deals with the local (French) issues
400 employees should be hired in France for the new R&D centers (in
Rousset and Nantes)
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HR system:
– Mix of the American system and the European one
– Fixed salaries form most part of employees compensation
– Incentives represent 20% of the fix for sales managers
– Big focus has been put on the stock options for some years
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Atmel retains the same policies across the company except where laws
dictate otherwise.
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Semiconductor industry speaks English as a standard so there is no
problem communicating.
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Cultural “faux pas” are taken in stride by both parties and do not impact
performance.
Essential advices
to Others
• Locating in France is a long term commitment
• The legal framework regarding social welfare
limits the flexibility to adapt the business as
needed
• But this is compensated by government
incentives
We Thank
• Executive 1: Hanène Maupas, Sales Manager,
hanene.maupas@atmel.com , +33 (0) 6 81 49 83 39
• Executive 2: Bernard Pruniaux, Corporate VP,
bernard.pruniaux@rfo.atmel.com, +33 (0)4 42 53 60 31
• Executive 3: Jeff Katz, Corporate VP Marketing
jkatz@atmel.com, +1 408 436 4205, San Jose, CA USA.
Bibliography
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Atmel 2003 Annual Report
B.Chailliol, Les Echos
“Atmel prêt à investir 486 M à Rousset d’ici à 2007”, 06/12/04
“Atmel va investir 110 M sur 3 ans dans son usine de Nantes”
11/02/04
“Atmel investit massivement en R&D sur son site de Rousset”
03/02/04
Interview of Jeff Katz, Conference Call Paris-San Jose 04/01/05
Interview of Bernard Pruniaux, Meeting in Rousset 21/12/04
Interview of Hanène Maupas, Meeting in Paris 17/12/04
http://www.atmel.com/
Atmel Rousset: Integrated Circuit, Research, Development and
Production – 0907D-E Oct 2003
Our Team
• Philippe Carastamatis
philippe.carastamatis@mailhec.net
• Gérald Maradan
gerald.maradan@mailhec.net
• Kerstin Seeber
kerstin.seeber@mailhec.net
• Peter Snowdon
peter.snowdon@mailhec.net