The Paradox of Atmel No More

Technology pundits said Atmel is one of the best-positioned companies in the Internet of Things (IoT) realm, if not the best IoT company outright. The San Jose, California–based chipmaker boasts an enormous portfolio of microcontrollers and a deep expertise in security and automotive electronics hardware. Yet its underperforming stock price worried many in the industry.

The news about Atmel’s desire to be acquired have been circulating for a few months. And that specific premise didn’t go well with the company’s IoT story. After all, how can one company claim a place in the IoT gold rush and also be willing to give up it autonomy while being an acquisition target?

Atmel: The long journey from EEPROM to IoT

The truth is that IoT is a very broad and fragmented marketplace that is still in an early stage of commercial realization. Meanwhile, margins are getting thinner and competition is getting intense in the cut-throat MCU world. Specifically, in Atmel’s case, which caters to both traditional segments such as white goods and energy meters as well as innovative new segments like medical and wearable devices.

The traditional MCU segments encompass a broad customer base and thinner margins while newer product lines like wearables are taking longer than expected to reach larger volumes. It’s worth noting that Atmel is a midsize chipmaker who is competing with MCU makers like NXP, STMicro and TI that are large semiconductor outfits.

Atmel Goes to Dialog

So, in today’s “buy or get bought” world of semiconductor consolidation, Atmel decided to cash in its IoT prowess at a good price. The U.K.-based Dialog Semiconductor plc has announced that it is acquiring Atmel for a total of $4.6 billion in cash and shares.

Dialog, an analog/mixed-signal power management chip firm, has been making advances toward the IoT universe through low-power wireless products like Bluetooth Smart and ZigBee. Dialog can benefit from Atmel’s digital assets as well as wireless connectivity stacks that the company has been acquiring over the past years.

So Dialog can add its low power expertise to these products and try to quickly expand in the IoT markets such as smart home and wearable devices. An investor projection claims that Dialog and Atmel will have nearly $2.7 billion in combined annual revenue and complementary products for connectivity and automotive segments.

Jalal Bagherli: The IoT ambitions

Atmel’s long technology journey that it started 21 years ago is coming to an end at the beginning of the IoT arena. The chipmaker from San Jose is now passing its IoT baton to Dialog that has ambitions of its own. Dialog, who has been a huge beneficiary of the popularity of mobile devices like smartphones and tablets, is now eyeing the next frontier in portable electronics: IoT and wearable devices.

From EEPROM to IoT

In 1984, Atmel was founded on George Perlegos’s groundbreaking work on electrically erasable programmable read-only memory or EEPROM. The Greek-born Perlegos was also part of the team at Intel that had developed the first cell-based flash memory chip.

Atmel began to develop memory chips for niche markets like cellular handsets. It quickly drew attention from OEMs—especially mobile phone makers like Ericsson, Motorola and Nokia—for designing chips that consumed less power than rival memory chips.

George Perlegos: The quiet man who built Atmel

Atmel also got noticed for spending nearly 50 percent of the revenue on research and development at a time during the mid-1990s when the industry norm hovered around 35 percent. Atmel’s low-key boss Perlegos gave a lot of independence to key engineers and helped develop a talent-centric company culture.

Atmel went public in 1991. Eventually, Perlegos took Atmel into programmable logic and application-specific standard product (ASSP) markets while successfully targeting the growing market niches. It worked quite well, for a while. In 2008, Steve Laub, a former Lattice Semiconductor executive, took the helm at Atmel after a boardroom battle.

Laub began a major strategic shift toward microcontrollers that subsequently laid the ground for Atmel’s big bet on IoT. Connectivity, especially wireless connectivity, became the new mantra at Atmel. And that wireless connectivity is now serving as the glue between Atmel and Dialog.

Also read:

4 Reasons why Atmel is Ready to Ride the IoT Wave

Atmel’s L21 MCU for IoT Tops Low Power Benchmark

Atmel Tightens Automotive Focus with Three New Cortex-M7 MCUs