Atmel Corporation in France Best in France Case Study HEC MBA January 2005 Mr. Carastamatis, Mr. Maradan, Mrs. Seeber and Mr. Snowdon
Atmel Corporation overview Atmel Products and markets Why did Atmel come to France Adaptation to France Cross-border values Human Factors Essential Advices Executive Overview
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 • Turnover: 1.5 B$ /year • Employees worldwide: 8500 • Employees in France: 3500 • Headquarters: San Jose (CA USA)
Atmel Corporation OverviewContributors • 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 & MarketsIntroduction • 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 & MarketsMarket Distribution • Industry Sector Distribution in 2003
Atmel Products & MarketsBusiness Areas Distribution • Geographic Markets in 2003
Atmel Products & MarketsFrench Operations • Some figures in France: • Revenues: $95 M 7% of total revenue • Employees: 3500 8500 worldwide • Number of factories: 3 7 worldwide • R&D centers: 3 8 worldwide • Production in France focused in memories (Flash and EEPROM), ASICs, RF chips: • High-end products requiring advanced silicon factories • The technology has been available in France a long time. • Biggest Investments: • 1 B$ 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 FranceChronology • 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 FranceReasons • 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 FranceReasons 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 FranceMain 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 FranceAtmel 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 FranceCosts 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 FranceKey Benefits • The product quality is high: • But could be reproduced elsewhere • And productivity is lower due to labor laws • 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. • 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 ValuesEngineers’ 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 ValuesManagers’ 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 ValuesHR 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 FactorsRelations • 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) • 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 • Atmel retains the same policies across the company except where laws dictate otherwise. • Semiconductor industry speaks English as a standard so there is no problem communicating. • Cultural “faux pas” are taken in stride by both parties and do not impact performance.
Essential advicesto 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,email@example.com , +33 (0) 6 81 49 83 39 • Executive 2: Bernard Pruniaux, Corporate VP,firstname.lastname@example.org, +33 (0)4 42 53 60 31 • Executive 3: Jeff Katz, Corporate VP Marketingjkatz@atmel.com, +1 408 436 4205, San Jose, CA USA.
Bibliography • 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 email@example.com • Gérald Maradan firstname.lastname@example.org • Kerstin Seeber email@example.com • Peter Snowdon firstname.lastname@example.org