Atmel is looking to sell its wafer fabs in North Tyneside and Heilbronn, Germany and reduce staff numbers by 1,300.

The firm said the move would increase profitability and save between $70m and $80m in 2007. About $55m is included in this estimate which will result from the sale of the facilities.

The firm added: “Atmel anticipates entering into a transition sourcing agreement with the eventual buyers of the wafer fabrication facilities.”

Around 1,000 staff will be cut from the firm’s payroll with the sale of the two facilities and in addition Atmel said 300 other positions would be lost through a combination of voluntary resignations, attrition and other actions.

Further explaining the move, Atmel said it would be refocusing on its high growth product lines and halt development of “lesser, unprofitable, non-core products”.

Any production deficit will be made up through an expansion of the firm’s outsourced production and better use of remaining fabs, said Atmel.

Steven Laub, Atmel's president and CEO, said: "While this decision was difficult given the company's many dedicated employees, these actions are essential to better position Atmel to compete and drive value for our shareholders. Focusing on our core business competencies, expanding our foundry relationships and the adoption of a fab-lite model are the right strategies for Atmel to better serve our customers, reduce manufacturing costs and enhance shareholder value."