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                                                Filed Pursuant to Rule 424(b)(3)
                                                      Registration No. 333-63996
                                  $511,500,000

                                   Atmel Logo

 Zero Coupon Convertible Subordinated Debentures Due 2021 and the Common Stock
                   Issuable Upon Conversion of the Debentures

     We issued the debentures in a private placement in May 2001. This
prospectus will be used by selling securityholders to resell their debentures
and the common stock issuable upon conversion of their debentures.

                           -------------------------

     The debentures are convertible prior to maturity into common stock at an
initial conversion rate of 22.983 shares per $1,000 principal amount at
maturity. The conversion rate will not be adjusted for accrued original issue
discount, but will be subject to adjustment in certain events.

                           -------------------------

     On or after May 23, 2006, we may redeem any of the debentures at the
redemption prices set forth in this prospectus. Holders may require us to
repurchase the debentures at the repurchase prices set forth in this prospectus
on May 23, 2006, May 23, 2011 and May 23, 2016.

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     Our common stock is quoted on the Nasdaq Stock Market's National Market
under the symbol "ATML." On July 24, 2001, the last reported sale price of our
common stock on the Nasdaq National Market was $8.90 per share.

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     The securities offered hereby involve a high degree of risk. See "Risk
Factors" beginning on page 5.

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     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

                     This prospectus is dated July 25, 2001
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                               TABLE OF CONTENTS



                                                              PAGE
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Forward-Looking Statements..................................    i
Prospectus Summary..........................................    1
Risk Factors................................................    5
Use of Proceeds.............................................   15
Ratio of Earnings to Fixed Charges..........................   15
Description of Debentures...................................   16
Description of Capital Stock................................   34
Certain United States Federal Income Tax Considerations.....   36
Selling Securityholders.....................................   40
Plan of Distribution........................................   44
Legal Matters...............................................   46
Experts.....................................................   46
Where You Can Find More Information.........................   46
Trademark Acknowledgements..................................   46


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     References to "Holders" refers to Holders of our zero coupon convertible
subordinated debentures due 2021, and references to "we," "us," "our," or
"Atmel" refer to Atmel Corporation and its subsidiaries, in each case, unless
the context otherwise requires or the text indicates otherwise. All of the
information in this prospectus gives effect to two-for-one stock splits effected
in the form of a 100% stock dividend to stockholders of record as of December 3,
1999 and August 11, 2000.
                           -------------------------

                           FORWARD-LOOKING STATEMENTS

     Some of the statements in this prospectus and in the documents incorporated
by reference in this prospectus constitute forward-looking statements. In some
cases, you can identify forward-looking statements by terms such as may, will,
should, expect, plan, intend, forecast, anticipate, believe, estimate, predict,
potential, continue or the negative of these terms or other comparable
terminology. The forward-looking statements contained in this prospectus involve
known and unknown risks, uncertainties and situations that may cause our or our
industry's actual results, level of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by these statements. These factors include
those listed under "Risk Factors" and elsewhere in this prospectus.

     Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. You should not place undue reliance on
these forward-looking statements.
                           -------------------------

     YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION DIFFERENT FROM THAT CONTAINED HEREIN. SELLING SECURITYHOLDERS ARE
OFFERING TO SELL, AND SEEKING OFFERS TO BUY, SHARES OF DEBENTURES AND/OR COMMON
STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE
INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF THIS
PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS OR OF ANY SALE
OF THE DEBENTURES OR COMMON STOCK.

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                               PROSPECTUS SUMMARY

     You should read the following summary together with the more detailed
information concerning our company, our debentures and our common stock and our
financial statements and related material appearing in this prospectus and in
the documents incorporated by reference in this prospectus. Because this is only
a summary, you should read the rest of this prospectus including the documents
incorporated by reference in this prospectus, before you invest in our
debentures or shares of common stock issuable upon conversion of the debentures.
Read this entire prospectus carefully, especially the risks described under
"Risk Factors."

     We are a global semiconductor company that designs, develops, manufactures
and sells a wide range of semiconductor integrated circuit products, or ICs. We
are leaders in developing and commercializing nonvolatile memory, or memory that
continues to store information after power is turned off. We leverage our
expertise in nonvolatile memories by combining them with microcontrollers,
digital signal processors and other logic to meet the evolving and growing needs
of our customers. These complex system-on-a-chip solutions for a broad array of
markets are manufactured using our leading-edge multiple process technologies,
including complementary metal oxide semiconductor (CMOS), double-diffused metal
oxide semiconductor (DMOS), logic, CMOS logic, bipolar, bipolar CMOS (BiCMOS),
silicon germanium (SiGe), SiGe BiCMOS, analog, bipolar double diffused CMOS
(BCDMOS) and radiation tolerant process technologies. We develop these process
technologies ourselves to ensure they provide the maximum possible performance.
Our products are used primarily in the following markets:

     Communications.  Communications, including wireless and wireline
telecommunications and data networking, is currently our largest end user
market, representing nearly half of our revenues for the year ended December 31,
2000. The rapid global acceptance of the wireless phone has resulted in an
increased demand for our products. For the wireless market, we provide
nonvolatile memory, microcontrollers, and ASICs that are used in global standard
for mobile communications (GSM) and code-division multiple access (CDMA) mobile
phones and their base stations, as well as two-way pagers, mobile radios, 900
MHz cordless phones and their base stations. We also have a range of products
based on Bluetooth, a new short range wireless protocol that enables instant
connectivity between electronic devices. Our principal customers in the wireless
market include Ericsson, Kenwood, Motorola, Nokia, Panasonic, Philips, Qualcomm,
Samsung, Siemens and Sony.

     For the data networking and wireline telecommunications markets, we provide
ASIC, nonvolatile memory and programmable logic products that are used in the
switches, routers, cable modem termination systems and digital subscriber line
(DSL) access multiplexers that are currently being used to build Internet
infrastructure. Our principal data networking and wireline telecommunications
customers include Alcatel, Cisco, Nortel, Siemens and 3Com.

     Consumer Electronics.  Our products are also used in a broad variety of
consumer electronics products. We provide multimode audio processors and MPEG2
based decoders with programmable transport for complex digital audio streams
used in digital TVs, set top boxes and DVD players. For digital cameras, we
provide a single chip digital camera solution. We provide demodulators and
decoders for cable modems. We also offer media access controllers for wireless
local area networks (LANs) and baseband controllers and network protocol stacks
for voice-over-internet-protocol (VoIP) telephone terminals. In addition, we
provide secure, encryption enabled, tamper resistant circuits for smart cards.
Our principal consumer electronics customers include FujiFilm, GemPlus, LG
Electronics, Mitsubishi, Panasonic, Philips, Samsung, Schlumberger and Sony.

     Computing, Storage and Printing.  For computing applications, we provide
Flash, universal serial bus (USB) hubs and ASICs for personal computers and
servers. In late 2000, we introduced a biometric security IC that verifies a
user's identity by scanning a finger. We believe this IC will find applications
where access to information, equipment and similar resources needs to be
controlled or monitored. For storage applications, we provide servo controllers,
read channels, and data interfaces for data storage subsystems, hard drives and
DVD players. We provide ASICs, nonvolatile memory and microcontrollers for laser
printers, inkjet printers, copy machines and scanners. Our principal customers
in these markets include ACER, Compaq, Hewlett-Packard, IBM, Intel, Lexmark,
Maxtor, Microsoft, Polaroid, Seagate,

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Toshiba and Western Digital. We manufacture more than 90% of our products in our
own wafer fabrication facilities, or fabs. We strive to continuously expand and
upgrade our fabs to meet customer demand. We believe our broad portfolio of
manufacturing capabilities allows us to produce ICs that enable our customers to
rapidly introduce leading edge electronic products that are differentiated by
higher performance, advanced features, lower cost, smaller size, longer battery
life and more memory.

     Our wafer fabrication facilities are as follows:

     - Colorado Springs, Colorado: two 6-inch wafer fabs;

     - Rousset, France: 8-inch wafer fab;

     - Heilbronn, Germany: 6-inch wafer fab;

     - Nantes, France: 6-inch wafer fab;

     - Irving, Texas: 8-inch wafer fab (expected to produce wafers near the end
       of the third quarter of 2001); and

     - North Tyneside, UK: 8-inch wafer fab (expected to produce wafers by the
       end of 2001).

     Our business has four segments, each of which requires different design,
development and marketing resources to produce and sell semiconductor integrated
circuits.

     - ASIC -- The products in our application specific integrated circuit
       (ASIC) segment include full custom application-specific integrated
       circuits, semicustom gate arrays and semicustom cell based integrated
       circuits designed to meet specialized customer requirements for their
       high-performance devices in a broad variety of applications.

     - Logic -- The products in our Logic segment include microcontrollers,
       eraseable programmable logic devices (EPLDs), and field programmable gate
       arrays (FPGAs), for sale to customers who use them in a broad variety of
       applications.

     - Nonvolatile Memories -- The products in our Nonvolatile Memories segment
       include Flash memories, electrically eraseable programmable read-only
       memories (EEPROMs), and eraseable programmable read only memories
       (EPROMs), for use in a broad variety of customer applications.

     - Atmel Wireless and Microcontroller Group (WMG) -- WMG produces analog,
       microcontroller and specialty products to service the automotive,
       telecommunications, consumer and industrial markets. WMG focuses on
       designing and supplying high-frequency products using silicon-germanium
       technology which are used in two-way pagers, digital enhanced cordless
       telecommunications, and mobile telephones, among other applications.

     In 2000, 36% of our sales were made to customers in North America, 28% to
customers in Europe, 34% to customers in Asia and 2% to customers in other
regions. We distribute our products directly through 16 U.S. sales offices and
29 international sales offices. In addition, we use distributors for indirect
distribution, including All American, Arrow Electronics, Avnet, Insight and
Pioneer. We were originally incorporated in California in December 1984. In
October 1999, we were reincorporated in Delaware. Our principal offices are
located at 2325 Orchard Parkway, San Jose, California 95131 and our telephone
number is (408) 441-0311.

RECENT DEVELOPMENTS

     Revised Outlook Announcement.  Beginning late in the fourth quarter of
2000, the global semiconductor industry began to experience a downturn. Our
business has already been impacted by this downturn, as reflected by our net
revenues of $526 million in the first quarter of 2001 declining by $48 million
from $574 million in the fourth quarter of 2000. On July 19, 2001, we announced
that our net revenues for the second quarter of 2001 totaled $367 million, a
decline of 30 percent from our net revenues in the first quarter of 2001. We
believe that this decline is due primarily to a decline in customer end-demand
for semiconductor products, particularly in the Flash market, European smart
card business and our North American distribution business. We also announced
earnings per share of $0.00 for the second quarter of 2001.

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                        THE DEBENTURES AND COMMON STOCK

Securities Offered.........  $511,500,000 aggregate principal amount at maturity
                             of zero coupon convertible subordinated debentures
                             due May 23, 2021 and shares of our common stock
                             issued upon conversion of debentures that have not
                             been resold pursuant to the registration statement
                             of which this prospectus forms a part. We will not
                             pay periodic interest on the debentures, except
                             under the circumstances described in "Description
                             of Debentures -- Optional Conversion to Semiannual
                             Coupon Debentures Upon Tax Event."

Yield to Maturity of
Debentures.................  4.75% per year compounded semi-annually, calculated
                             from May 23, 2001.

Conversion.................  Holders have the option to convert the debentures
                             into our common stock at any time prior to maturity
                             or their earlier redemption. Holders can convert
                             the debentures into common stock at a fixed
                             conversion rate of 22.983 shares per $1,000
                             principal amount at maturity. The conversion rate
                             is subject to adjustment if certain events occur.
                             See "Description of Debentures -- Conversion of
                             Debentures by Holders."

                             Holders may exercise the option to convert only
                             before the debentures reach maturity and before we
                             redeem or repurchase them.

Subordination..............  The debentures are subordinated to all existing and
                             future senior indebtedness as that term is defined
                             in "Description of Debentures -- Subordination." As
                             of March 31, 2001, we had approximately $643
                             million of indebtedness outstanding that would have
                             constituted senior indebtedness. As of the same
                             date, our subsidiaries had approximately $709
                             million of indebtedness and other liabilities
                             outstanding to which the debentures would have been
                             effectively subordinated (including trade and other
                             payables but excluding inter-company obligations).
                             See "Description of Debentures -- Subordination."

Original Issue Discount....  The debentures were issued at original issue
                             discount for United States federal income tax
                             purposes equal to the excess of their principal
                             amount at maturity over the amount of their issue
                             price. We will not make periodic cash payments of
                             interest on the debentures. Nonetheless, Holders
                             should be aware that accrued original issue
                             discount will be included periodically in their
                             gross income for United States federal income tax
                             purposes. See "Certain U.S. Federal Income Tax
                             Considerations."

                             Holders should be aware that they will be
                             responsible for the payment of taxes that may be
                             due even though they may not receive any cash
                             payment at the time original issue discount is
                             included in their gross income.

Redemption at Our Option...  We may not redeem the debentures before May 23,
                             2006. At any time on or after May 23, 2006, we may
                             redeem all or part of the debentures for cash.
                             Holders may convert the debentures after they are
                             called for redemption at any time up to the
                             redemption date. Redemption prices are equal to the
                             issue price plus accrued original issue discount
                             through the date of redemption. See "Description of
                             Debentures -- Redemption of Debentures at Our
                             Option."

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Fundamental Change.........  Holders may require us to repurchase the debentures
                             if we experience a Fundamental Change. The
                             Fundamental Change purchase price is equal to the
                             issue price plus accrued original issue discount
                             through the date of repurchase. See "Description of
                             Debentures -- Repurchase at the Option of the
                             Holder Upon a Fundamental Change."

Repurchase at the Option of
the Holder.................  Holders may require us to repurchase the debentures
                             on May 23, 2006, May 23, 2011 and May 23, 2016 for
                             a purchase price equal to the issue price plus
                             accrued original issue discount through the date of
                             repurchase. We may elect to pay all or a portion of
                             the purchase price in common stock instead of cash,
                             subject to certain conditions. See "Description of
                             Debentures -- Repurchase of Debentures at the
                             Option of the Holder."

Conversion to Semiannual
  Coupon Debentures........  If a tax event prevents us from deducting original
                             issue discount payable on the debentures, we may
                             elect to pay Holders interest in cash and terminate
                             the further accrual of original issue discount. See
                             "Description of Debentures -- Optional Conversion
                             to Semiannual Coupon Debentures Upon a Tax Event."

Use of Proceeds............  We will not receive any of the proceeds from the
                             sale by any selling securityholders of the
                             debentures or the underlying common stock.

Registration Rights........  We will use our reasonable efforts to keep the
                             shelf registration statement, of which this
                             prospectus forms a part, effective until the
                             earlier of (i) the sale pursuant to the shelf
                             registration statement of all the securities
                             registered under the shelf registration statement
                             and (ii) the expiration of the holding period
                             applicable to such securities held by our
                             non-affiliates under Rule 144(k) of the Securities
                             Act, or any successor provision, subject to certain
                             permitted exceptions. See "Description of
                             Debentures -- Registration Rights."

NASDAQ Common Stock
  Symbol...................  ATML

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                                  RISK FACTORS

     Before you invest in the debentures or shares of common stock underlying
the debentures, you should be aware of the various risks, including those
described below. You should carefully consider these risk factors, together with
all of the other information included or incorporated by reference in this
prospectus, before you decide whether to purchase the debentures or common
stock. The risks set out below are not the only risks we face.

     If any of the following risks occur, our business, financial condition and
results of operations could be materially adversely affected. In such case, the
trading price of the debentures and common stock could decline, and you may lose
all or a part of your investment.

OUR REVENUE AND OPERATING RESULTS FLUCTUATE SIGNIFICANTLY DUE TO A VARIETY OF
FACTORS, WHICH MAY RESULT IN VOLATILITY OR A DECLINE IN OUR STOCK PRICE.

     Our future operating results will be subject to quarterly variations based
upon a wide variety of factors, many of which are not within our control. These
factors include:

     - the cyclical nature of both the semiconductor industry and the markets
       addressed by our products;

     - fluctuations in manufacturing yields;

     - the timing of introduction of new products;

     - the timing of customer orders;

     - price erosion;

     - changes in mix of products sold;

     - the extent of utilization of manufacturing capacity;

     - product obsolescence;

     - availability of supplies and raw materials;

     - price competition and other competitive factors; and

     - fluctuations in currency exchange rates.

     Any unfavorable changes in any of these factors could harm our operating
results.

     In particular, we believe that our future sales growth will depend
substantially on the success of our new products. Our new products are generally
incorporated into our customers' products or systems at the design stage.
However, design wins may precede volume sales by a year or more. We may not be
successful in achieving design wins or any design win may not result in future
revenues, which depend in large part on the success of the customer's end
product or system. We expect the average selling price of each of our products
to decline as individual products mature and competitors enter the market. To
offset average selling price decreases, we rely primarily on reducing costs in
the manufacturing of those products, increasing unit sales to absorb fixed costs
and introducing new, higher priced products which incorporate advanced features
or integrated technologies to address new or emerging markets. To the extent
that such cost reductions and new product introductions do not occur in a timely
manner, our operating results could be harmed. From time to time, our quarterly
revenues and operating results can become more dependent upon orders booked and
shipped within a given quarter and, accordingly, our quarterly results can
become less predictable and subject to greater variability.

     In addition, our continued success will depend in large part on the
continued growth of various electronics industries that use semiconductors,
including manufacturers of computers, telecommunications equipment, automotive
electronics, industrial controls, consumer electronics, data networking
equipment and military equipment, and economic growth generally. Our success
will also depend upon a better supply and demand balance within the
semiconductor industry.

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     In 1998 and early 1999, the semiconductor industry experienced a
significant downturn, characterized by, among other things, diminished product
demand, production overcapacity and decline of average selling prices of
products. While sales of our ASIC and logic-related products increased during
this period, continued price reduction of our commodity non-volatile memory
products (caused by continued weakened business conditions and excess
manufacturing capacity in the semiconductor industry) more than offset the
impact of higher sales of ASIC and logic-related products in 1998. These
non-volatile memory products included our commodity EPROMs and Flash memories.
These business conditions in the worldwide semiconductor industry also
contributed to our decision to implement a restructuring plan, which we
announced in the second quarter of fiscal 1998. The restructuring plan, which
resulted in a nonrecurring charge of approximately $66 million, included a ten
percent work force reduction and an impairment charge to write down the value of
certain manufacturing equipment and machinery with older process technology. We
also recognized an in-process research and development charge of $23 million
relating to the WMG acquisition during the second quarter of fiscal 1998.

     Beginning late in the fourth quarter of 2000, the semiconductor industry
began to experience a downturn, and worldwide semiconductor sales are currently
projected to decline by approximately 25% in 2001 from 2000. Our business has
been impacted by this recent downturn, with the effect that our net revenues of
$526 million in the first quarter of 2001 declined by $48 million (or 8%) from
$574 million in the fourth quarter of 2000, and our net revenues of $367 million
in the second quarter of 2001 declined by $159 million (or 30%) from the first
quarter of 2001. Many of the business conditions we experienced in the 1998
downturn are again present in our business, and at present we cannot predict
with any degree of certainty when business conditions will improve.

IF WE DO NOT SUCCESSFULLY INCREASE OUR MANUFACTURING CAPACITY, WE MAY FACE
CAPACITY CONSTRAINTS THAT COULD HARM OUR BUSINESS.

     We currently manufacture our products at our wafer fabrication facilities
located in Colorado Springs, Colorado; Heilbronn, Germany; Nantes, France; and
Rousset, France. We currently expect our Irving, Texas facility to be producing
wafers in the third quarter of 2001 and our new facility in North Tyneside, UK,
to be operational and producing wafers by the end of 2001. We believe that we
will be able to substantially meet our production needs from these facilities
through the end of the fourth quarter of 2003, although this date may vary
depending on, among other things, our rate of revenue growth. We will be
required to hire, train and manage additional production personnel in order to
increase production capacity as planned. We will also be required to
successfully implement new manufacturing technologies, such as .25-micron,
 .18-micron, .13 micron and chemical and mechanical planarization in our wafer
manufacturing facilities to increase our manufacturing capacity and yields. If
we cannot expand our capacity on a timely basis, we could experience significant
capacity constraints that would prevent us from meeting customer demand. In
addition, the depreciation and other expenses that we will incur in connection
with the expansion of our manufacturing capacity may continue to reduce our
gross margins in future periods.

     We are exploring alternatives for the further expansion of our
manufacturing capacity, which would likely occur during and after 2001,
including:

     - expanding our current wafer fabrication facilities;

     - purchasing or building one or more additional wafer fabrication
       facilities; and

     - entering into strategic relationships to obtain additional capacity.

     Any of these alternatives could require a significant investment by us, and
none of the alternatives for expanding our manufacturing capacity may be
available on a timely basis.

     The cost of expanding our manufacturing capacity at our existing facilities
is expected to be funded through a combination of available cash resources, cash
from operations and additional lease, debt or equity financing, including this
offering. We may not be able to obtain the additional financing necessary to
fund the expansion of our manufacturing facilities.

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     Expanding our wafer fabrication capacity involves significant risks,
including:

     - shortages of materials and skilled labor;

     - unavailability of semiconductor manufacturing and testing equipment;

     - unforeseen environmental or engineering problems;

     - work stoppages;

     - approvals and requirements of governmental and regulatory agencies; and

     - unanticipated cost increases.

     Any one of these risks could delay the building, equipping and production
start-up of a new facility or the expansion of an existing facility, and could
involve significant additional costs or reduce our anticipated revenues. In
addition, the timing of commencement of operation of our North Tyneside, UK
facility will depend upon the availability, timely delivery, successful
installation and testing of complex process equipment.

     As a result of these and other factors, any expanded or new facility may
not be completed and in volume production on time or within budget. Furthermore,
we may be unable to achieve adequate manufacturing yields in any expanded or new
facility in a timely manner, and our revenues may not increase in proportion to
the anticipated increase in manufacturing capacity associated with any expanded
or new facility.

IF WE ARE UNABLE TO EFFECTIVELY UTILIZE OUR WAFER MANUFACTURING CAPACITY AND
FAIL TO ACHIEVE ACCEPTABLE MANUFACTURING YIELDS, OUR BUSINESS WOULD BE HARMED.

     The fabrication of our integrated circuits is a highly complex and precise
process, requiring production in a tightly controlled, clean environment. Minute
impurities, difficulties in the fabrication process, defects in the masks used
to print circuits on a wafer or other factors can cause a substantial percentage
of wafers to be rejected or numerous die on each wafer to be nonfunctional. We
may experience problems in achieving acceptable yields in the manufacture of
wafers, particularly in connection with the expansion of our manufacturing
capacity and related transitions. The interruption of wafer fabrication or the
failure to achieve acceptable manufacturing yields at any of our wafer
fabrication facilities would harm our business.

     In 1997 and 1998, we made substantial capital expenditures to increase our
wafer fabrication capacity at our facilities in Colorado Springs, Colorado and
Rousset, France, and acquired two wafer fabrication facilities in connection
with our acquisition of WMG. In 1998, our gross margin declined significantly as
a result of the increase in fixed costs and operating expenses related to this
expansion of capacity, and lower product margins in many of our non-volatile
memory products due to severe price decline. In 1999, the declining gross margin
trend reversed, primarily due to a higher unit sales volume over which to spread
fixed costs and operating expenses, the inclusion of WMG's positive gross margin
for all of 1999 compared to only ten months in 1998, and the stabilization of
average selling prices.

     If the most recent downturn in the semiconductor industry experienced in
the first half of 2001 continues into the second half of 2001 or worsens, our
wafer fabrication capacity would continue to be under-utilized, and our
inability to quickly reduce fixed costs such as depreciation and other fixed
operating expenses necessary to operate our wafer manufacturing facilities would
harm our operating results. If net revenues do not continue to increase
sufficiently in future periods, our business could be harmed. We experienced
production delays and yield difficulties in connection with earlier expansions
of our wafer fabrication capacity. Production delays, difficulties in achieving
acceptable yields at any of our fabrication facilities or overcapacity could
materially and adversely affect our operating results.

THE CYCLICAL NATURE OF THE SEMICONDUCTOR INDUSTRY COULD CREATE FLUCTUATIONS IN
OUR OPERATING RESULTS.

     The semiconductor industry has historically been cyclical, characterized by
wide fluctuations in product supply and demand. From time to time, the industry
has also experienced significant downturns,
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often in connection with, or in anticipation of, maturing product cycles and
declines in general economic conditions. A downturn of this type occurred in
1998. These downturns have been characterized by diminished product demand,
production overcapacity and accelerated decline of average selling prices, and
in some cases have lasted for more than a year. Our business could be harmed by
industry-wide fluctuations in the future. The commodity memory portion of the
semiconductor industry, from which we derived 48% of our revenue in the first
quarter of 2001, compared to 52% of our revenues in 2000, 46% of our revenues in
1999, and approximately half of our revenues through 1998, suffered from excess
capacity in 1998, which led to substantial price reductions during that year.
While these conditions improved in 1999 and 2000, another slowdown began late in
the fourth quarter of 2000, and if these conditions continue or worsen, our
growth and operating results would be harmed. In addition, in the past our
operating results were harmed by industry-wide fluctuations in the demand for
semiconductors, which resulted in under-utilization of our manufacturing
capacity. Our business could be harmed in the future by cyclical conditions in
the semiconductor industry or by slower growth in any of the markets served by
our customer products.

OUR MARKETS ARE HIGHLY COMPETITIVE, AND IF WE DO NOT COMPETE EFFECTIVELY, WE MAY
SUFFER PRICE REDUCTIONS, REDUCED REVENUES, REDUCED GROSS MARGINS AND LOSS OF
MARKET SHARE.

     We compete in markets that are intensely competitive and characterized by
rapid technological change, product obsolescence and price decline. Throughout
our product line, we compete with a number of large semiconductor manufacturers,
such as AMD, Fujitsu, Hitachi, Intel, LSI Logic, Microchip, Sharp and
STMicroelectronics. Some of these competitors have substantially greater
financial, technical, marketing and management resources than we do. As we have
introduced new products, we increasingly compete directly with these companies,
and we may not be able to compete effectively. We also compete with emerging
companies attempting to sell products in specialized markets addressed by our
products. We compete principally on the basis of the technical innovation and
performance of our products, including their speed, density, power usage,
reliability and specialty packaging alternatives, as well as on price and
product availability. Although our average selling prices increased relative to
those of the prior years in 2000 and late 1999, during 1998 and early 1999 we
experienced significant price competition in our non-volatile memory business
and especially for EPROM and Flash products. We expect continuing competitive
pressures in our markets from existing competitors and new entrants, which,
among other things, could reverse the recent trend of strengthening average
selling prices for our products.

     In addition to the factors described above, our ability to compete
successfully depends on a number of factors, including the following:

     - our success in designing and manufacturing new products that implement
       new technologies and processes;

     - our ability to offer integrated solutions using our advanced non-volatile
       memory process with other technologies;

     - the rate at which customers incorporate our products into their systems;

     - product introductions by our competitors;

     - the number and nature of our competitors in a given market; and

     - general market and economic conditions.

     Many of these factors are outside of our control, and we may not be able to
compete successfully in the future.

WE MUST KEEP PACE WITH TECHNOLOGICAL CHANGE TO REMAIN COMPETITIVE.

     The average selling prices of our products historically have decreased over
the products' lives and are expected to continue to do so. As a result, our
future success depends on our ability to develop and introduce new products
which compete effectively on the basis of price and performance and which
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address customer requirements. We are continually in the process of designing
and commercializing new and improved products to maintain our competitive
position. The success of new product introductions is dependent upon several
factors, including timely completion and introduction of new product designs,
achievement of acceptable fabrication yields and market acceptance. Our
development of new products and our customers' decision to design them into
their systems can take as long as three years, depending upon the complexity of
the device and the application. Accordingly, new product development requires a
long-term forecast of market trends and customer needs, and the successful
introduction of our products may be adversely affected by competing products or
technologies serving markets addressed by our products. Our qualification
process involves multiple cycles of testing and improving a product's
functionality to ensure that our products operate in accordance with design
specifications. If we experience delays in the introduction of new products, our
future operating results could be harmed.

     In addition, new product introductions frequently depend on our development
and implementation of new process technologies, and our future growth will
depend in part upon the successful development and market acceptance of these
process technologies. Our integrated solution products will require more
technically sophisticated sales and marketing personnel to market these products
successfully to customers. We are developing new products with smaller feature
sizes, the fabrication of which will be substantially more complex than
fabrication of our current products. If we are unable to design, develop,
manufacture, market and sell new products successfully, our operating results
will be harmed. Our new product development, process development, or marketing
and sales efforts may not be successful, our new products may not achieve market
acceptance, and price expectations for our new products may not be achieved, any
of which could harm our business.

OUR OPERATING RESULTS ARE HIGHLY DEPENDENT ON OUR INTERNATIONAL SALES AND
OPERATIONS, WHICH EXPOSES US TO VARIOUS POLITICAL AND ECONOMIC RISKS.

     Sales to customers outside North America accounted for approximately 72%,
64% and 65% of net revenues in the first quarter of 2001, and in 2000 and 1999.
We expect that revenues derived from international sales will continue to
represent a significant portion of net revenues. In recent years, we have
significantly expanded our international operations, most recently through our
acquisitions of a wafer fabrication facility in North Tyneside, UK in September
2000, and Atmel Grenoble in May 2000. International sales and operations are
subject to a variety of risks, including:

     - greater difficulty in protecting intellectual property;

     - greater difficulty in staffing and managing foreign operations;

     - greater risk of uncollectible accounts;

     - longer collection cycles;

     - potential unexpected changes in regulatory practices, including export
       license requirements, trade barriers, tariffs and tax laws;

     - sales seasonality; and

     - general economic and political conditions in these foreign markets.

     Further, we purchase a significant portion of our raw materials and
equipment from foreign suppliers, and we incur labor and other operating costs
in foreign currencies, particularly at our French and German manufacturing
facilities. As a result, our costs will fluctuate along with the currencies and
general economic conditions in the countries in which we do business, which
could harm our operating results.

     Approximately 80%, 75% and 78% of our sales in the first quarter of 2001,
and in 2000 and 1999 were denominated in U.S. dollars. During these periods, our
products became less price competitive in countries with currencies declining in
value against the dollar. In 1998, business conditions in Asia were severely
affected by banking and currency issues that adversely affected our operating
results. While these conditions stabilized in 1999 and 2000, the continuance or
worsening of adverse business and financial

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conditions in Asia, where 34% of our revenues were generated in the first
quarter of 2001, and in 2000 and 1999, would likely harm our operating results.

WHEN WE TAKE FOREIGN ORDERS DENOMINATED IN LOCAL CURRENCIES, WE RISK RECEIVING
FEWER DOLLARS WHEN THESE CURRENCIES WEAKEN AGAINST THE DOLLAR, AND MAY NOT BE
ABLE TO ADEQUATELY HEDGE AGAINST THIS RISK.

     When we take a foreign order denominated in a local currency we will
receive fewer dollars than we initially anticipated if that local currency
weakens against the dollar before we collect our funds. In addition to reducing
revenue, this risk will negatively affect our operating results. In Europe,
where our significant operations have costs denominated in European currencies,
these negative impacts on revenue can be partially offset by positive impacts on
costs. However, in Japan, while our yen denominated sales are also subject to
exchange rate risk, we do not have significant operations with which to
counterbalance our exposure. Sales denominated in yen were 7% of our revenue in
the first quarter of 2001, as well as in the first quarter of 2000. Sales
denominated in foreign currencies were 20% in the first quarter of 2001,
compared to 21% in the comparable quarter of 2000. We also face the risk that
our accounts receivables denominated in foreign currencies will be devalued if
such foreign currencies weaken quickly and significantly against the dollar.

IF WE FAIL TO MAINTAIN SATISFACTORY RELATIONSHIPS WITH MOTOROLA AND OTHER KEY
CUSTOMERS, OUR BUSINESS MAY BE HARMED.

     In 2000, 1999 and 1998, 12%, 12% and 14% of our net revenues were derived
from sales to Motorola. Our ability to maintain close, satisfactory
relationships with Motorola and other large customers is important to our
business. A reduction, delay, or cancellation of orders from Motorola or our
other large customers would harm our business. For instance, sales to Motorola
decreased by $26 million, or 5% of our fourth quarter 2000 net revenues, in the
first quarter of 2001 from the fourth quarter of 2000. The loss of one or more
of our key customers, or reduced orders by any of our key customers, could harm
our business and results of operations. Moreover, our customers may vary order
levels significantly from period to period, and customers may not continue to
place orders with us in the future at the same levels as in prior periods.

WE ARE NOT PROTECTED BY LONG-TERM CONTRACTS WITH OUR CUSTOMERS.

     We do not typically enter into long-term contracts with our customers, and
we cannot be certain as to future order levels from our customers. When we do
enter into a long-term contract, the contract is generally terminable at the
convenience of the customer. In the event of an early termination by one of our
major customers, it is unlikely that we will be able to rapidly replace that
revenue source, which would harm our financial results.

OUR FAILURE TO SUCCESSFULLY INTEGRATE BUSINESSES OR PRODUCTS WE HAVE ACQUIRED
COULD DISRUPT OR HARM OUR ONGOING BUSINESS.

     We have from time to time acquired complementary businesses, products and
technologies. Achieving the anticipated benefits of an acquisition depends, in
part, upon whether the integration of the acquired business, products or
technology is accomplished in an efficient and effective manner. Moreover,
successful acquisitions in the semiconductor industry may be more difficult to
accomplish than in other industries because such acquisitions require, among
other things, integration of product offerings, manufacturing operations and
coordination of sales and marketing and research and development efforts. The
difficulties of such integration may be increased by the need to coordinate
geographically separated organizations, the complexity of the technologies being
integrated, and the necessity of integrating personnel with disparate business
backgrounds and combining two different corporate cultures. The integration of
operations following an acquisition requires the dedication of management
resources that may distract attention from the day-to-day business, and may
disrupt key research and development, marketing or sales efforts. The inability
of management to successfully integrate any future acquisition could harm our
business.

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Furthermore, products acquired in connection with acquisitions may not gain
acceptance in our markets, and we may not achieve the anticipated or desired
benefits of such transactions.

WE MAY FACE THIRD PARTY INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS THAT COULD BE
COSTLY TO DEFEND AND RESULT IN LOSS OF SIGNIFICANT RIGHTS.

     The semiconductor industry is characterized by vigorous protection and
pursuit of intellectual property rights or positions, which have on occasion
resulted in significant and often protracted and expensive litigation. We have
from time to time received, and may in the future receive, communications from
third parties asserting patent or other intellectual property rights covering
our products or processes. In the past, we have received specific allegations
from major companies alleging that certain of our products infringe patents
owned by such companies. In order to avoid the significant costs associated with
our defense in litigation involving such claims, we may license the use of the
technologies that are the subject of these claims from such companies and be
required to make corresponding royalty payments, which may harm our operating
results.

     We have in the past been involved in intellectual property infringement
lawsuits which harmed our operating results. Although we intend to vigorously
defend against any such lawsuits, we may not prevail given the complex technical
issues and inherent uncertainties in patent and intellectual property
litigation. Moreover, the cost of defending against such litigation, both in
terms of management time and attention, legal fees and product delays, could be
substantial, whatever the outcome. If any patent or other intellectual property
claims against us are successful, we may be prohibited from using the
technologies subject to these claims, and if we are unable to obtain a license
on acceptable terms, license a substitute technology, or design new technology
to avoid infringement, our business and operating results may be significantly
harmed.

     We have several cross-license agreements with other companies. In the
future, it may be necessary or advantageous for us to obtain additional patent
licenses from existing or other parties, but these license agreements may not be
available to us on acceptable terms, if at all.

OUR LONG TERM DEBT COULD HARM OUR ABILITY TO OBTAIN ADDITIONAL FINANCING, AND
OUR ABILITY TO MEET OUR DEBT OBLIGATIONS WILL BE DEPENDENT UPON OUR FUTURE
PERFORMANCE.

     As of March 31, 2001, our convertible notes and long term debt less current
portion was $654 million compared to $669 million at December 31, 2000, and $654
million at December 31, 1999. Our convertible notes and long term debt less
current portion increased by $200,027,190, the aggregate issue price of the
debentures, when we completed the initial offering of the debentures on May 23,
2001. An increase in our debt-to-equity ratio could materially and adversely
affect our ability to obtain additional financing for working capital,
acquisitions or other purposes and could make us more vulnerable to industry
downturns and competitive pressures. Our ability to meet our debt obligations
will depend upon our future performance, which will be subject to the financial,
business and other factors affecting our operations, many of which are beyond
our control.

     Since a substantial portion of our operations are conducted through our
subsidiaries, the cash flow and the consequent ability to service debt are
partially dependent upon the earnings of our subsidiaries and the distribution
of those earnings, or upon loans or other payments of funds by those
subsidiaries, to us. These subsidiaries are separate and distinct legal entities
and have no obligation, contingent or otherwise, to pay any amounts due pursuant
to our long-term debt or to make any funds available therefor, whether by
dividends, distributions, loans or other payments. In addition, the payment of
dividends or distributions and the making of loans and advances to us by any of
our subsidiaries could, in the future, be subject to statutory or contractual
restrictions and other various business considerations and contingent upon the
earnings of those subsidiaries. Any right held by us to receive any assets of
any of our subsidiaries upon its liquidation or reorganization will be
effectively subordinated to the claims of that subsidiary's creditors, including
trade creditors, except to the extent that we are recognized as a creditor of
such subsidiary, in

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which case our claims would still be subordinate to any security interest in the
assets of such subsidiary and any indebtedness of such subsidiary senior to that
held by us.

WE MAY NEED TO RAISE ADDITIONAL CAPITAL THAT MAY NOT BE AVAILABLE.

     Semiconductor companies that maintain their own fabrication facilities have
substantial capital requirements. We made capital expenditures of $333 million
in the first quarter of 2001, compared to $961 million in all of 2000 and $172
million in 1999. We intend to continue to make capital investments to support
business growth and achieve manufacturing cost reductions and improved yields.
Currently, we expect our 2001 capital expenditures to be relatively level with
2000 at approximately $900 million, of which we expect approximately $700
million was expended at June 30, 2001. We may seek additional equity or debt
financing to fund further expansion of our wafer fabrication capacity or to fund
other projects. The timing and amount of such capital requirements cannot be
precisely determined at this time and will depend on number of factors,
including demand for products, product mix, changes in semiconductor industry
conditions and competitive factors. Additional debt or equity financing may not
be available when needed or, if available, may not be available on satisfactory
terms.

WE DEPEND ON INDEPENDENT ASSEMBLY CONTRACTORS WHICH MAY NOT HAVE ADEQUATE
CAPACITY TO FULFILL OUR NEEDS AND WHICH MAY NOT MEET OUR QUALITY AND DELIVERY
OBJECTIVES.

     We manufacture wafers for our products at our fabrication facilities, and
the wafers are initially tested at our facilities. After wafer testing, we ship
the wafers to one of our independent assembly contractors located in China,
Malaysia, the Philippines, South Korea, Taiwan and Thailand where the wafers are
separated into die, packaged and, in some cases, tested. Our reliance on
independent contractors to assemble, package and test our products involves
significant risks, including reduced control over quality and delivery
schedules, the potential lack of adequate capacity and discontinuance or
phase-out of the contractors' assembly processes. These independent contractors
may not continue to assemble, package and test our products for a variety of
reasons. Moreover, because our assembly contractors are located in foreign
countries, we are subject to certain risks generally associated with contracting
with foreign suppliers, including currency exchange fluctuations, political and
economic instability, trade restrictions and changes in tariff and freight
rates. Accordingly, we may experience problems in timelines and the adequacy or
quality of product deliveries, any of which could have a material adverse effect
on our results of operations.

WE ARE SUBJECT TO ENVIRONMENTAL REGULATIONS WHICH COULD IMPOSE UNANTICIPATED
REQUIREMENTS ON OUR BUSINESS IN THE FUTURE. ANY FAILURE TO COMPLY WITH CURRENT
OR FUTURE ENVIRONMENTAL REGULATIONS MAY SUBJECT US TO LIABILITY OR SUSPENSION OF
OUR MANUFACTURING OPERATIONS.

     We are subject to a variety of federal, state and local governmental
regulations related to the discharge or disposal of toxic, volatile or otherwise
hazardous chemicals used in our manufacturing processes. Increasing public
attention has been focused on the environmental impact of semiconductor
operations. Although we have not experienced any material adverse effect on our
operations from environmental regulations, any changes in such regulations or in
their enforcement may impose the need for additional capital equipment or other
requirements. If for any reason we fail to control the use of, or to restrict
adequately the discharge of, hazardous substances under present or future
regulations, we could be subject to substantial liability or our manufacturing
operations could be suspended.

WE DEPEND ON CERTAIN KEY PERSONNEL, AND THE LOSS OF ANY KEY PERSONNEL MAY
SERIOUSLY HARM OUR BUSINESS.

     Our future success depends in large part on the continued service of our
key technical and management personnel and on our ability to continue to attract
and retain qualified employees, particularly those highly skilled design,
process and test engineers involved in the manufacture of existing products and
the development of new products and processes. The competition for such
personnel is intense, and the loss of key employees, none of whom is subject to
an employment agreement for a specified term or a post-employment
non-competition agreement, could harm our business.
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FAILURE TO MANAGE OUR GROWTH MAY SERIOUSLY HARM OUR BUSINESS.

     Our business has grown in recent years through both internal expansion and
acquisitions, and continued growth may cause a significant strain on our
infrastructure and internal systems. To manage our growth effectively, we must
continue to improve and expand our management information systems. We commenced
an implementation of a new SAP enterprise resource planning and management
system for our worldwide operations in 2000, which is not yet fully implemented.
Our success depends to a significant extent on the management skills of our
executive officers. If we are unable to manage growth effectively, our results
of operations will be harmed.

BUSINESS INTERRUPTIONS COULD HARM OUR BUSINESS.

     Our operations are vulnerable to interruption by fire, earthquake, power
loss, telecommunications failure and other events beyond our control. We do not
have a detailed disaster recovery plan. Our facilities in the State of
California are currently subject to electrical blackouts as a consequence of a
shortage of available electrical power. In the event these blackouts continue or
increase in severity, they could disrupt the operations of our affected
facilities. In addition, business interruption insurance may not be enough to
compensate us for losses that may occur and any losses or damages incurred by us
as a result of business interruptions could significantly harm our business.

PROVISIONS IN OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION AND
PREFERRED SHARES RIGHTS AGREEMENT MAY HAVE ANTI-TAKEOVER EFFECTS.

     Our board of directors has the authority to issue up to 5,000,000 shares of
preferred stock and to determine the price, voting rights, preferences and
privileges and restrictions of those shares without the approval of our
stockholders. The rights of the holders of common stock will be subject to, and
may be harmed by, the rights of the holders of any shares of preferred stock
that may be issued in the future. The issuance of preferred stock may delay,
defer or prevent a change in control, by making it more difficult for a third
party to acquire a majority of our stock. In addition, the issuance of preferred
stock could have a dilutive effect on our stockholders. We have no present plans
to issue shares of preferred stock.

     We also have a preferred shares rights agreement with BankBoston, N.A., as
rights agent, dated as of September 4, 1996 and amended and restated on October
18, 1999, which gives our stockholders certain rights that would likely delay,
defer or prevent a change of control of Atmel in a transaction not approved by
our board of directors. See "Description of Capital Stock".

THE DEBENTURES ARE SUBORDINATED.

     The debentures are unsecured and subordinated in right of payment to all of
our existing and future senior indebtedness. In the event of our bankruptcy,
liquidation or reorganization or upon acceleration of the debentures due to an
event of default under the indenture and in certain other events, our assets
will be available to pay obligations on the debentures only after all senior
indebtedness has been paid in full. As result, there may not be sufficient
assets remaining to pay amounts due on any or all of the outstanding debentures.
The debentures are also effectively subordinated to the liabilities, including
trade payables, of any of our subsidiaries. Neither we nor our subsidiaries are
limited from incurring debt, including senior indebtedness, under the indenture.
If we or our subsidiaries were to incur additional debt or liabilities, our
ability to pay our obligations on the debentures could be adversely affected. As
of March 31, 2001 we had approximately $643 million of senior indebtedness
outstanding, and our subsidiaries had approximately $709 million of debt and
other liabilities outstanding (including trade and other payables but excluding
inter-company obligations). We may from time to time incur additional debt,
including senior indebtedness. Our subsidiaries may also from time to time incur
other additional debt and liabilities.

WE MAY NOT BE ABLE TO REPURCHASE OR REDEEM DEBENTURES.

     On May 23, 2006, May 23, 2011 and May 23, 2016, we are obligated to
purchase, at the Holders' election, any outstanding debentures. In addition,
Holders may require us to redeem all or a portion of
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their debentures in the event of a Fundamental Change. We may not have enough
funds to pay the repurchase price on a purchase date (in which case, we could be
required to issue common stock to pay the repurchase price) or pay the
Fundamental Change purchase price in the event of a Fundamental Change. Any
existing or future credit agreements or other debt agreements may provide that a
Fundamental Change or our obligation to purchase or redeem the debentures upon a
fundamental change or otherwise would be an event of default under such
agreement. As a result, we may be restricted or prohibited from repurchasing or
redeeming the debentures. If we are prohibited from repurchasing or redeeming
the debentures, we would seek the consent of then-existing lenders to repurchase
or redeem the debentures or we would attempt to refinance the debt. If we are
unable to obtain a consent or refinance the debt, we would be prohibited from
repurchasing or redeeming the debentures, which would result in an event of
default under the indenture. In these circumstances, if Fundamental Change
resulted in an event of default under any lending agreement, the subordination
provisions of the indenture would probably restrict or prohibit payments to the
Holders. The term "Fundamental Change" is limited to certain specified
transactions and may not include other events that might adversely affect our
financial condition. Our obligation to offer to redeem the debentures upon a
Fundamental Change would not necessarily afford the Holders protection in the
event of a highly leveraged transaction, reorganization, merger or similar
transaction involving Atmel.

A PUBLIC MARKET MAY NOT DEVELOP FOR THE DEBENTURES.

     The initial purchasers have advised us that they currently make a market in
the debentures. However, they are not obligated to make a market and may stop
such market making at any time without notice. In addition, market making
activity will be subject to the limits imposed by the Securities Act and the
Exchange Act. It is possible that no active market for the debentures will
develop, and even if one does develop, it may not be maintained. If an active
market for the debentures does not develop or is not sustained, the trading
price of such debentures could be materially adversely affected.

OUR DEBENTURES MAY NOT BE RATED OR MAY RECEIVE A LOWER RATING THAN ANTICIPATED.

     We believe it is likely that one or more rating agencies may rate the
debentures. If one or more rating agencies assign the debentures a rating lower
than expected by investors, or do not rate the debentures, the market price of
the debentures and our common stock would be significantly harmed.

OUR STOCK PRICE HAS FLUCTUATED IN THE PAST AND MAY CONTINUE TO FLUCTUATE IN THE
FUTURE.

     The market price of our common stock has experienced significant
fluctuations and may continue to fluctuate significantly. The market price of
our common stock may be significantly affected by factors such as the
announcement of new products or product enhancements by us or our competitors,
technological innovations by us or our competitors, quarterly variations in our
results of operations, changes in earnings estimates by market analysts and
general market conditions or market conditions specific to particular
industries. Statements or changes in opinions, ratings, or earnings estimates
made by brokerage firms or industry analysts relating to the market in which we
do business or relating to us specifically could result in an immediate and
adverse effect on the market price of our stock. In addition, in recent years
the stock market has experienced extreme price and volume fluctuations. These
fluctuations have had a substantial effect on the market prices for many high
technology companies, often unrelated to the operating performance of the
specific companies.

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   17

                                USE OF PROCEEDS

     We will not receive any proceeds from the sale by any selling
securityholders of the debentures or the underlying common stock.

                       RATIO OF EARNINGS TO FIXED CHARGES

     The ratio of earnings to fixed charges for each of the periods indicated is
as follows:



                                                                                    THREE MONTHS
                                                                                       ENDED
                                                YEAR ENDED DECEMBER 31,              MARCH 31,
                                        ----------------------------------------    ------------
                                        1996     1997    1998(1)    1999    2000    2000    2001
                                        -----    ----    -------    ----    ----    ----    ----
                                                                       
Ratio of earnings to fixed charges....  21.18    2.45      --       3.43    7.91    5.87    7.04


- -------------------------
(1) In 1998, earnings were insufficient to cover fixed charges.

     These computations include us and our consolidated subsidiaries. In
calculating the ratio of earnings to fixed charges, "earnings" consist of net
income (loss) before provisions for income taxes plus fixed charges. Fixed
charges consist of interest expense, charges and amortization of debt, expenses
and discount on premium related to indebtedness, whether expensed or
capitalized, and that portion of rental expense we believe to be representative
of interest.

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                           DESCRIPTION OF DEBENTURES

     The debentures have been issued under an indenture dated as of May 23, 2001
between us and State Street Bank and Trust Company of California, N.A., as
trustee. We have summarized the material terms and provisions of the indenture
in this section. You should read the indenture for additional information before
you buy any of these debentures. References in this section to "us," "we" and
"our" are solely to Atmel Corporation and not to our subsidiaries, and
references to "you" refer to holders of the debentures.

GENERAL

     The debentures are unsecured obligations of our company and are subordinate
in right of payment to our obligations described under "-- Subordination." The
debentures are limited to $511,500,000 aggregate principal amount at maturity.
The debentures are scheduled to mature on May 23, 2021. The debentures were
issued at a substantial discount from their principal amount at maturity and
will therefore have original issue discount for U.S. Federal income tax
purposes. See "Certain United States Federal Income Tax Considerations."

     There will be no periodic cash payments of interest on the debentures,
except as described under "-- Optional Conversion to Semiannual Coupon
Debentures Upon a Tax Event."

     In periods during which a debenture remains outstanding, the accrual of
original issue discount (the difference between the issue price of a debenture
and its principal amount at maturity) will be compounded semi-annually using a
year comprised of twelve 30-day months. The accrual of original issue discount
commenced on the date the debentures were issued. Original issue discount or, if
the debentures are converted to semiannual coupon debentures following the
occurrence of a tax event, interest on the debentures, will cease to accrue upon
conversion, repurchase or redemption of the debentures under the terms of the
indenture.

     The principal amount at maturity of each debenture is payable at the office
or agency of the paying agent, in the Borough of Manhattan, The City of New
York, which shall initially be an office or agency of the trustee, or any other
office of the paying agent maintained for this purpose. You may present
debentures for conversion into common stock at the office of the conversion
agent. Debentures in definitive form may be presented for exchange for other
debentures or registration of transfer at the office of the registrar. The
trustee currently serves as paying agent, conversion agent and registrar. We
will not impose a service charge for any registration, transfer or exchange of
debentures. However, we may require the holder to pay for any tax, assessment or
other governmental charge to be paid in connection with any registration,
transfer or exchange of debentures.

RANKING

     The debentures constitute subordinated debt and rank junior to all of our
senior indebtedness. See "-- Subordination." As of March 31, 2001, we had
approximately $643 million of outstanding senior indebtedness.

     The debentures are our obligations exclusively. Our subsidiaries have no
payment obligations under the debentures. Since a substantial portion of our
operations are conducted through our subsidiaries, our cash flow and our ability
to service our debt, including the debentures, are partially dependent on the
earnings of our subsidiaries and the distribution of our subsidiaries' earnings
to us. Any dividends, loans or advances to us by our subsidiaries may be subject
to statutory or contractual restrictions. In addition, our right to receive
assets upon a liquidation or reorganization of any subsidiary is effectively
subordinated to the claims of that subsidiary's other creditors. As of March 31,
2001, our subsidiaries had approximately $709 million of outstanding
indebtedness and other liabilities to which the debentures would be effectively
subordinated (including trade and other payables). Our right to receive any
assets of our subsidiaries upon their liquidation or reorganization is
effectively subordinated to the claims of that subsidiary's creditors (including
trade creditors), except to the extent that we are recognized as a creditor of
our subsidiary, in

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which case our claims would still be subordinate to any security interest in the
assets of that subsidiary and any indebtedness of that subsidiary senior to that
held by us.

     Neither we nor our subsidiaries are restricted from incurring additional
debt under the indenture.

SUBORDINATION

     The debentures are subordinated to the prior payment of all of our senior
indebtedness.

     If we dissolve, wind up, liquidate or reorganize our business, we will
repay our senior indebtedness before we make any payment on the debentures. If
the debentures are accelerated because of an event of default, we will pay the
holders of any senior indebtedness in full before we pay the debenture holders.
We must promptly notify the holders of any senior indebtedness if there is an
event of default under the indenture.

     We may not make any payment on the debentures if there is:

     - a default in the payment of senior indebtedness beyond any applicable
       grace period; or

     - any other default of designated senior indebtedness that permits the
       holders of designated senior indebtedness to accelerate its maturity and
       the trustee receives a payment blockage notice.

     We are required to resume payments on the debentures:

     - in case of any payment default, on the date the default is cured, waived
       or ceases to exist; and

     - in the case of any non-payment default, on the earlier of (A) the date
       the non-payment default is cured, waived, or ceases to exist, and (B) 179
       days after the date on which the trustee receives the payment blockage
       notice.

     No new period of payment blockage may be commenced unless:

     - 365 days have elapsed since the initial effectiveness of the immediately
       preceding payment blockage notice; and

     - all scheduled payments of principal amount at maturity, issue price,
       original issue discount, redemption price, repurchase price, Fundamental
       Change price and interest, if any, on the debentures that have become due
       and payable have been fully paid in cash.

     No non-payment default that existed on the date of delivery of any payment
blockage notice to the trustee shall be the basis for any later payment blockage
notice.

     If the trustee or any debenture holder receives any payment or
distribution, then they must hold the payment in trust for the benefit of
holders of senior indebtedness. In the event of our bankruptcy, dissolution or
reorganization, holders of our senior indebtedness may receive more, ratably,
and holders of the debentures may receive less, ratably, than our other
creditors. The subordination provisions will not prevent the occurrence of an
event of default under the indenture.

     We pay the trustee reasonable compensation and have agreed to indemnify the
trustee against certain liabilities it may incur in connection with its duties.
The trustee's claims for compensation and indemnification generally are senior
to the claims of debenture holders.

     The following defined terms have the following meanings when used in this
subordination section:

     "designated senior indebtedness" means senior indebtedness that expressly
provides that it is to be "designated senior indebtedness" for purposes of the
indenture governing the debentures. The terms of the

                                        17
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designated senior indebtedness may condition or limit the right of that
particular designated senior indebtedness to exercise the rights conferred to
designated senior indebtedness under the indenture

     "indebtedness" means:

          (1) all of our indebtedness, obligations and other liabilities,
     contingent or otherwise, (A) for borrowed money, including overdrafts,
     foreign exchange contracts, currency exchange agreements, interest rate
     protection agreements, and any loans or advances from banks or (B)
     evidenced by bonds, debentures, notes or similar instruments, whether or
     not the recourse of the lender is to the whole of our assets or only to a
     portion of our assets, other than any account payable or other accrued
     current liability or obligation incurred in the ordinary course of business
     in connection with obtaining materials or services;

          (2) all of our obligations, contingent or otherwise, with respect to
     letters of credit, bank guarantees or bankers' acceptances;

          (3) all of our obligations, contingent or otherwise, under leases that
     are required to be accounted for as capitalized leases under generally
     accepted accounting principles;

          (4) all of our obligations, contingent or otherwise, under synthetic
     leases or any other leases or related documents, including purchase
     agreements, in connection with leases of real property that provide that we
     are contractually obligated to purchase or cause a third party to purchase
     the leased property and thereby guarantee a minimum residual value of the
     leased property to the lessor and our obligations under such leases or
     related documents to purchase or to cause a third person to purchase the
     leased property;

          (5) all of our obligations, contingent or otherwise, with respect to
     an interest rate or other swap, cap or collar agreement or other similar
     instrument or agreement or foreign currency hedge, exchange, purchase or
     similar instrument or agreement;

          (6) all direct or indirect guarantees or similar agreements by us in
     respect of, and all of our obligations, contingent or otherwise, to
     purchase or otherwise acquire or otherwise assure a creditor against loss
     in respect of, indebtedness, obligations or liabilities of another person
     of the kind described in items (1) through (5) above;

          (7) any indebtedness or other obligations described in items (1)
     through (6) above that are secured by any mortgage, pledge, lien or other
     encumbrance existing on property which is owned or held by us, regardless
     of whether the indebtedness or other obligation secured thereby shall have
     been assembled by us; and

          (8) any and all deferrals, renewals, extensions and refundings of, or
     amendments, modification or supplements to, any indebtedness, obligation or
     liability of the kind described in items (1) through (7) above.

     "senior indebtedness" means the principal, premium, if any, interest,
including any interest accruing after bankruptcy, rent and all fees, costs,
expenses and other amounts accrued or due on indebtedness, whether created,
incurred, assumed, guaranteed or in effect guaranteed by us, including all
deferrals, renewals, extensions, refundings, amendments, modifications or
supplements to the above. Senior indebtedness does not include:

          (1) indebtedness that expressly provides that it shall not be senior
     in right of payment to the debentures or expressly provides that it is on
     the same basis or junior to the debentures;

          (2) indebtedness to any of our majority-owned subsidiaries; and

          (3) the Zero Coupon Convertible Subordinated Debentures due 2018.

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CONVERSION OF DEBENTURES BY HOLDERS

     You may convert your debenture into shares of our common stock at any time
prior to maturity. However, if we elect to redeem a debenture, you may convert
it only until the close of business on the last trading day prior to a
redemption date, unless we fail to pay the redemption price. If you have
delivered a repurchase notice exercising your option to require us to repurchase
your debenture, you may not convert the debenture unless you withdraw the notice
in accordance with the terms of the indenture. Similarly, if you exercise your
option to require us to repurchase your debenture upon a Fundamental Change (as
defined in the indenture), that debenture may be converted only if you withdraw
your election to exercise your option in accordance with the terms of the
indenture. You may convert your debentures in whole or in part provided that you
convert them in multiples of $1,000 principal amount at maturity.

     The initial conversion rate is 22.983 shares of common stock per $1,000
principal amount at maturity of debentures, subject to adjustment upon the
occurrence of the events described below. If, on conversion, you would be
entitled to a fractional share of common stock, you will instead receive cash in
an amount equal to the closing price of shares of our common stock on the
trading day immediately prior to the conversion date multiplied by such
fraction.

     You will not receive any cash payment on conversion of a debenture
representing accrued original issue discount. Instead, accrued original issue
discount will be deemed paid in full rather than canceled, extinguished or
forfeited. Consequently, our delivery to you of the fixed number of shares of
our common stock into which the debenture is convertible, together with the cash
payment, if any, in lieu of a fractional share of our common stock, will be
deemed to satisfy our obligation to pay the principal amount at maturity of the
debenture, including accrued original issue discount attributable to the period
from the issue date to the conversion date. We will not adjust the conversion
ratio to account for accrued original issue discount. The conversion date is the
date on which all of the requirements for delivery of the debenture for
conversion have been satisfied.

     The conversion rate is subject to adjustment to prevent dilution upon the
occurrence of any one of the following events:

          (1) the issuance of our common stock as a dividend or distribution on
     our common stock;

          (2) the issuance to our stockholders of rights or warrants to purchase
     our common stock at below market price;

          (3) certain subdivisions, combinations and reclassifications of our
     outstanding common stock;

          (4) distributions to all our common stockholders of our capital stock,
     debt securities, or other assets, excluding distributions of:

        - common stock in the manner described in item (1) above;

        - rights or warrants in the manner described in item (2) above; or

        - cash in the manner described in item (5) below;

          (5) cash distributions, excluding any quarterly cash dividend on our
     common stock if the quarterly distribution does not exceed the greater of:

        - the cash dividend per share from the previous quarter not requiring an
          adjustment under this provision, as adjusted to reflect subdivisions
          or combinations of our common stock; or

        - 3.75% of the average of the last reported sales price of the common
          stock during the 10 trading days immediately prior to the dividend
          declaration date;

          (6) payment in respect of a tender offer or exchange offer by us or
     any of our subsidiaries for our common stock if the price per share exceeds
     the current market price of our common stock on the next trading day after
     the last date on which tenders or exchanges may be made; and

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          (7) payment in respect of certain tender offers or exchange offers by
     a third party in which, as of the closing or expiration date of such offer,
     our board of directors does not recommend rejection of the offer, in which
     case an adjustment will be made only if:

        - the tender offer or exchange offer increases the ownership of the
          person making the offer to more than 25% of our common stock; and

        - the cash and other consideration paid exceeds the market price of our
          common stock on the next trading day after the last date on which
          tenders or exchanges may be made.

     If an adjustment were required to be made under item (5) above as a result
of a quarterly distribution, the adjustment would be based upon the amount by
which the cash distributed exceeded the maximum quarterly dividend permitted
under that item. If an adjustment were required to be made under item (5) as
result of a distribution other than a quarterly dividend, the adjustment would
be based upon the full amount of cash distributed. The adjustment referred to in
item (7) above will not be made if, as of the closing of the tender offer or
exchange offer, the offering documents disclose a plan or an intention to cause
us to engage in consolidation, merger or sale of all or substantially all our
assets.

     Rights or warrants distributed by us to all of our holders of common stock
entitling the holder to subscribe for or purchase shares of our capital stock
upon the occurrence of one or more specified trigger events shall not be deemed
distributed for purposes of (4) above until the last to occur of those trigger
events if the rights or warrants:

     - automatically transfer along with shares of our common stock;

     - are not exercisable; and

     - are to be issued along with future issuances of our common stock.

     If our common stockholders become entitled to receive stock, other
securities, property, cash or other assets upon any reclassification of our
common stock, any consolidation or merger involving us, or any sale to another
entity of substantially all of our assets, then you will generally be able to
convert your debentures into the same type of consideration received by our
common stockholders in an amount equal to what you would have received had you
done so immediately prior to the triggering event.

     We may increase the conversion rate for a period of at least 20 days so
long as:

     - the increase remains irrevocable during that period; and

     - our board of directors determines that the increase is in our best
       interest, which determination shall be conclusive.

     We must give at least seven days' advance notice of any increase in the
conversion rate. In addition to increases in the conversion rate of the type
described above, we may increase the conversion rate as we deem advisable to
avoid or diminish any income tax to holders of our common stock resulting from
any dividend or distribution of our stock, or rights to acquire stock, or from
any event treated as a dividend, distribution or right to acquire our stock for
income tax purposes. See "Certain United States Federal Income Tax
Considerations."

     No adjustment in the conversion rate will be required unless the adjustment
would require a change of at least 1% in the conversion rate then in effect;
provided that any adjustment that would otherwise be required to be made will be
carried forward and taken into account in any subsequent adjustment.

     Except as stated above, the conversion rate will not be adjusted for the
issuance of our common stock, any securities convertible into or exchangeable
for our common stock or any rights to purchase any of the foregoing.

     If, following a tax event, we exercise our option to have interest accrue
on a debenture in lieu of original issue discount, you will be entitled to
receive on conversion the same number of shares of common stock that you would
have received had we not exercised our option. If we exercise our option,
debentures

                                        20
   23

surrendered for conversion during the period from the close of business on the
record date next preceding the next interest payment date to the opening of
business on the next interest payment date (except debentures to be redeemed on
the next interest payment date) must also be accompanied by an amount equal to
the accrued and unpaid interest on the debenture that you are to receive. Except
where debentures surrendered for conversion must be accompanied by the payment
described in this paragraph, no interest on converted debentures will be payable
by us on any interest payment date subsequent to the date of conversion. See
"-- Optional Conversion to Semiannual Coupon Debentures Upon a Tax Event."

     In the event of a taxable distribution to our common stockholders or in
certain other circumstances requiring an adjustment to the conversion rate, the
debenture holders may, in certain circumstances, be deemed to have received a
distribution subject to United States income tax as a dividend. In certain other
circumstances, the absence of an adjustment may result in a taxable dividend to
the holders of common stock. See "Certain United States Federal Income Tax
Considerations."

REDEMPTION OF DEBENTURES AT OUR OPTION

     We may not redeem the debentures before May 23, 2006. Beginning on May 23,
2006, we may redeem the debentures for cash in whole or in part at any time, by
mailing a redemption notice to the debenture holders not less than 30 days nor
more than 60 days prior to the redemption date. The redemption price will be an
amount in cash equal to 100% of the sum of:

     - $391.06, the original issue price per $1,000 principal amount; and

     - accrued original issue discount up to and including the date of
       redemption.

     The debentures are redeemable in multiples of $1,000 principal amount at
maturity. There is no sinking fund for the debentures.

     The table below shows redemption prices of debentures per $1,000 principal
amount at maturity at May 23, 2006, and at each May 23 thereafter until maturity
on May 23, 2021. These redemption prices reflect accrued original issue discount
up to and including each redemption date. The redemption price of debentures
redeemed between any two of the dates listed below would include an additional
amount reflecting original issue discount accrued from the next preceding
redemption date through the actual date of redemption.



                                                                   (2)
                                                 (1)             ACCRUED               (3)
                                              DEBENTURE       ORIGINAL ISSUE        REDEMPTION
                   DATE                      ISSUE PRICE    DISCOUNT AT 4.75%     PRICE(1) + (2)
                   ----                      -----------    ------------------    --------------
                                                                         
May 23, 2006...............................    $391.06           $103.46            $  494.52
May 23, 2007...............................     391.06            127.23               518.29
May 23, 2008...............................     391.06            152.14               543.20
May 23, 2009...............................     391.06            178.25               569.31
May 23, 2010...............................     391.06            205.61               596.67
May 23, 2011...............................     391.06            234.29               625.35
May 23, 2012...............................     391.06            264.35               655.41
May 23, 2013...............................     391.06            295.85               686.91
May 23, 2014...............................     391.06            328.87               719.93
May 23, 2015...............................     391.06            363.47               754.53
May 23, 2016...............................     391.06            399.73               790.79
May 23, 2017...............................     391.06            437.74               828.80
May 23, 2018...............................     391.06            477.58               868.64
May 23, 2019...............................     391.06            519.33               910.39
May 23, 2020...............................     391.06            563.09               954.15
At Stated Maturity (May 23, 2021)..........     391.06            608.94             1,000.00


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     If we elect to convert the debentures to semiannual coupon debentures
following a tax event, the debentures will be redeemable at the Restated
Principal Amount (as described below in "-- Optional Conversion to Semiannual
Coupon Debentures Upon a Tax Event") plus accrued and unpaid interest, if any,
to the applicable redemption date.

     If less than all of the outstanding debentures held in certificated form
are to be redeemed, the trustee will select the debentures held in certificated
form to be redeemed in principal amounts at maturity of $1,000 or integral
multiples thereof by lot, pro rata or by another method the trustee considers
fair and appropriate. If a portion of your certificated debentures is selected
for partial redemption and you convert a portion of your debentures, the
converted portion will be deemed to be the portion selected for redemption.
Debentures registered in the name of DTC or its nominee will be redeemed as
described under the caption entitled "Book-Entry System."

REPURCHASE OF DEBENTURES AT THE OPTION OF THE HOLDER

     You have the right to require us to repurchase the debentures as of May 23,
2006, May 23, 2011 and May 23, 2016. The purchase price payable for a debenture
will be equal to the issue price plus accrued original issue discount through
the repurchase date. If, prior to the repurchase date, we have elected to
convert the debentures to semiannual coupon debentures following a tax event,
the purchase price will be equal to the Restated Principal Amount plus accrued
and unpaid interest to the repurchase date. See "-- Optional Conversion to
Semiannual Coupon Debentures Upon a Tax Event." The table below shows the
purchase prices of a debenture as of the specified repurchase dates.



                    REPURCHASE DATE                      PURCHASE PRICE
                    ---------------                      --------------
                                                      
May 23, 2006...........................................     $494.52
May 23, 2011...........................................      625.35
May 23, 2016...........................................      790.79


     We may, at our option, elect to pay the repurchase price in cash, in shares
of our common stock or in any combination of the two. For a discussion of the
tax treatment of debenture holders receiving cash, shares of our common stock or
both, see "Certain Federal Income Tax Considerations."

     If we elect to pay the repurchase price, in whole or in part, in shares of
our common stock, the number of shares to be delivered in exchange for the
portion of the repurchase price to be paid in our common stock will be equal to
that portion of the repurchase price divided by the market price (as defined
below) of our common stock. We will not, however, deliver fractional shares in
repurchases using shares of our common stock as consideration. Debenture holders
who would otherwise be entitled to receive fractional shares will instead
receive cash in an amount equal to the market price of a share of our common
stock multiplied by such fraction.

     We will be required to repurchase any outstanding debenture for which you
deliver a written repurchase notice to the paying agent. This notice must be
delivered during the period beginning at any time from the opening of business
on the date that is 20 business days prior to the repurchase date until the
close of business on the repurchase date. If a repurchase notice is given and
withdrawn during that period, we will not be obligated to repurchase the
debentures listed in the notice. Our repurchase obligation will be subject to
certain additional conditions. The paying agent initially will be the trustee.

     Your repurchase notice must state:

          (1) if certificated debentures have been issued, the debenture
     certificate numbers (or, if your debentures are not certificated, your
     repurchase notice must comply with appropriate DTC procedures);

          (2) the portion of the principal amount at maturity of debentures to
     be repurchased, which must be in $1,000 multiples;

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   25

          (3) that the debentures are to be repurchased by us pursuant to the
     applicable provisions of the debentures and the indenture; and

          (4) your election, in the event that we decide to pay all or a portion
     of the repurchase price in shares of our common stock but prove unable to
     satisfy the conditions for common stock payment and ultimately have to pay
     cash, to:

        - withdraw your repurchase notice with respect to all or a portion of
          the debentures listed therein; or

        - receive cash for the entire purchase price for all the debentures
          listed in your repurchase notice.

     If you fail to indicate your election under item (4) above, you will be
deemed to have elected to receive cash for the entire purchase price for all the
debentures listed in your repurchase notice. You may withdraw any written
repurchase notice by delivering a written notice of withdrawal to the paying
agent prior to the close of business on the repurchase date. Your withdrawal
notice must state:

     - the principal amount at maturity of the withdrawn debentures;

     - if certificated debentures have been issued, the certificate numbers of
       the withdrawn debentures (or, if your debentures are not certificated,
       your withdrawal notice must comply with appropriate DTC procedures); and

     - the principal amount at maturity, if any, which remains subject to the
       repurchase notice.

     We must give notice of an upcoming repurchase date to all debenture holders
not less than 20 business days prior to the repurchase date at their addresses
shown in the register of the registrar. We will also give notice to beneficial
owners as required by applicable law. This notice will state, among other
things:

     - whether we will pay the purchase price of the debentures in cash, shares
       of our common stock, or both (in which case the relative percentages will
       be specified);

     - if we elect to pay all or a portion of the repurchase price in shares of
       our common stock, the method by which we are required to calculate
       "market price" of the common stock; and

     - the procedures that holders must follow to require us to repurchase their
       debentures.

     The "market price" means the average sale price of our common stock for the
five trading days ending on the third business day prior to the applicable
repurchase date (assuming the third business day prior to the applicable
repurchase date is a trading day, or if not, the five trading days ending on the
last trading day prior to the third business day), appropriately adjusted to
take into account the occurrence of certain events that would result in an
adjustment of the conversion rate with respect to our common stock.

     The "sale price" of our common stock on any date means the closing sale
price per share of our common stock on that date (or if no closing sale price is
reported, the average of the bid and ask prices or, if more than one in either
case, the average of the average bid and the average ask prices) as reported on
the Nasdaq's National Market or, if our common stock is listed on a United
States national or regional securities exchange, as reported in composite
transactions for the principal United States securities exchange on which our
common stock is traded.

     Because the market price of our common stock will be determined prior to
the applicable repurchase date, debenture holders bear the market risk that our
common stock will decline in value between the date the market price is
calculated and the repurchase date. We may pay the repurchase price or any
portion of the repurchase price in shares of our common stock only if our common
stock is listed on a United States national securities exchange or quoted in an
inter-dealer quotation system of any registered United States national
securities association.

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   26

     Upon determination of the actual number of shares of our common stock to be
issued in accordance with the foregoing provisions, if required, we will notify
the securities exchanges or quotation systems on which our common stock is then
listed or quoted and disseminate the number of shares to be issued on our
website or through another public medium.

     Our right to repurchase your debentures, in whole or in part, with shares
of our common stock is subject to various conditions, including:

     - registration of the shares of our common stock to be issued upon
       repurchase under the Securities Act and the Exchange Act, if required;
       and

     - qualification or registration of the shares of our common stock to be
       issued upon repurchase under applicable state securities laws, if
       necessary, or the availability of an exemption therefrom.

     If these conditions are not satisfied by a repurchase date, we will pay the
purchase price of the debentures to be repurchased entirely in cash. We may not
change the form or components or percentages of components of consideration to
be paid for the debentures once we have given the debenture holders the required
notice, except as described in the preceding sentence. Payment of the repurchase
price for a debenture for which a repurchase notice has been delivered and not
withdrawn is conditioned upon book-entry transfer or delivery of the debenture,
together with necessary endorsements, to the paying agent at its office in the
Borough of Manhattan, The City of New York, or any other office of the paying
agent, at any time after delivery of the repurchase notice. Payment of the
repurchase price for the debenture will be made promptly following the later of
the repurchase date and the time of book-entry transfer or delivery of the
debenture. If the paying agent holds money or securities sufficient to pay the
repurchase price of the debenture on the business day following the repurchase
date, then, on and after the date:

     - the debenture will cease to be outstanding;

     - original issue discount (or, if the debentures have been converted to
       interest-bearing debentures following a tax event, interest) will cease
       to accrue; and

     - all other rights of the holder will terminate.

     This will be the case whether or not book-entry transfer of the debenture
has been made or the debenture has been delivered to the paying agent, and all
other rights of the debenture holder will terminate, other than the right to
receive the repurchase price upon delivery of the debenture.

     Our ability to repurchase debentures with cash may be limited by the terms
of our then-existing loan or credit agreements. The indenture will prohibit us
from repurchasing debentures for cash from debenture holders if any event of
default under the indenture has occurred and is continuing, except a default in
the payment of the repurchase price with respect to the debentures.

     Even though we become obligated to repurchase any outstanding debenture on
a repurchase date, we may not have sufficient funds to pay the repurchase price
on that repurchase date. If this were to occur, we could be required to issue
shares of our common stock to pay the repurchase price at valuations based on
then prevailing market prices for all debentures tendered by their holders.

     We will comply with the provisions of Rule 13e-4 and any other tender offer
rules under the Exchange Act that may be applicable at the time of the tender
offer. We will file a Schedule TO or any other schedule required in connection
with any offer by us to repurchase the debentures.

REPURCHASE AT THE OPTION OF THE HOLDER UPON A FUNDAMENTAL CHANGE

     If we undergo a Fundamental Change (as defined below), you will have the
option to require us to purchase for cash any or all of your debentures on a
purchase date that is 30 days after the date we provide you with notice of such
Fundamental Change. We will pay a purchase price equal to the issue price plus
accrued original issue discount through the purchase date or, if applicable, the
Restated Principal Amount plus accrued and unpaid interest to the date of
purchase. You may require us to

                                        24
   27

purchase all or any part of your debentures provided that the principal amount
at maturity of the debentures being purchased is an integral multiple of $1,000.

     A "Fundamental Change" is the occurrence of any transaction or event in
connection with which all or substantially all of our common stock will be
exchanged for, converted into, acquired for or constitute solely the right to
receive (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or any
other method) any form of consideration which is not all or substantially all
common stock listed (or, upon consummation of or immediately following such
transaction or event, which will be listed) on a United States national
securities exchange or approved for quotation on the Nasdaq's National Market or
any similar United States system of automated dissemination of quotations of
securities prices.

     In order to exercise your right to require us to repurchase your debentures
upon a Fundamental Change, you must deliver a written notice to the paying agent
prior to the close of business on the business day prior to the date on which
the debentures are to be repurchased. You may withdraw the notice by delivering
a written withdrawal notice to the paying agent before the repurchase date. On
or before the 10th day following a Fundamental Change, we are required to mail
to the trustee and all debenture holders of record a written notice:

     - stating that a Fundamental Change has occurred; and

     - explaining the repurchase rights that have arisen as a consequence of the
       Fundamental Change.

     To exercise your repurchase right, you must deliver to us (or our
designated agent) within 30 days after the date of our Fundamental Change
notice:

     - written notice of your election to exercise your repurchase right; and

     - the debentures to be repurchased duly endorsed for transfer.

     Payment for debentures surrendered for repurchase (and not withdrawn) prior
to the expiration of the 30-day period will be made promptly following the
repurchase date.

     You may withdraw any written repurchase notice by delivering a written
notice of withdrawal to the paying agent prior to the close of business on the
repurchase date. The withdrawal notice must state:

     - the principal amount at maturity of the withdrawn debentures;

     - if certificated debentures have been issued, the certificate numbers of
       the withdrawn debentures (or, if your debentures are not certificated,
       your withdrawal notice must comply with appropriate DTC procedures); and

     - the principal amount at maturity, if any, which remains subject to the
       repurchase notice.

     If, following a tax event, we have previously exercised our option to pay
interest on the debentures instead of accruing original issue discount, we will
purchase the debentures at a cash price equal to the Restated Principal Amount
plus accrued and unpaid interest from the date we exercised our option. See
"-- Optional Conversion to Semiannual Coupon Debentures Upon a Tax Event."

     In the event of a Fundamental Change, we will comply with the provisions of
Rule 13e-4 and any other tender offer rules under the Exchange Act that may be
applicable at the time we repurchase the debentures. We will also file a
Schedule TO or any other schedule required in connection with any offer by us to
repurchase the debentures.

     The repurchase rights of the debenture holders could discourage a potential
acquirer from acquiring us, but the Fundamental Change repurchase feature does
not result from management's knowledge of any potential acquirer's attempt to
obtain control of us, and is not part of an anti-takeover strategy on the part
of management.

     The term "Fundamental Change" is limited to specific types of transactions
and does not include other events that might adversely affect our financial
condition. Moreover, the Fundamental Change
                                        25
   28

repurchase feature may not protect you in the event of a highly leveraged
transaction, reorganization, merger or similar transaction involving or
affecting us.

     Our ability to repurchase debentures with cash following a Fundamental
Change may be limited by the terms of our then-existing loan or credit
agreements. No debentures may be repurchased at the option of holders upon a
Fundamental Change if there has occurred and is continuing an event of default
described under "-- Events of Default; Notice and Waiver" below. However,
debentures may be repurchased if the event of default is in the payment of the
Fundamental Change purchase price with respect to the debentures.

MERGERS AND SALES OF ASSETS

     We may not consolidate with or merge into any other entity or convey,
transfer or lease substantially all of our assets to another entity, unless:

     - the successor entity, if other than Atmel Corporation, assumes all of our
       obligations under the debentures and the indenture;

     - the successor entity is organized and existing under the laws of the
       United States or any State thereof or the District of Columbia;

     - we or the successor entity will not immediately thereafter be in default
       under the indenture.

     Upon the assumption of our obligations by a successor entity as described
above, we will be discharged from all obligations under the debentures and the
indenture, subject to certain exceptions. Some transactions that would
constitute a Fundamental Change would permit each debenture holder to require us
to repurchase their debentures as described under "-- Repurchase at Option of
the Holder Upon a Fundamental Change."

OPTIONAL CONVERSION TO SEMIANNUAL COUPON DEBENTURES UPON A TAX EVENT

     We have the option to convert the debentures to interest-bearing debentures
following a tax event. From and after the date a tax event occurs, we may elect
to pay interest at 4.75% per year on the debentures instead of accruing original
issue discount. The principal amount will be restated as the sum of (A) the
issue price and (B) the amount of original issue discount accrued up to the date
we exercise our conversion option. This "Restated Principal Amount" will then be
the amount due at maturity. If we elect this option, interest will be based on a
360-day year comprised of twelve 30-day months. Interest will accrue from the
date we exercise our conversion option and will be payable semiannually on each
May 23 and November 23 to holders of record on the immediately preceding May 8
and on November 8, respectively.

     A tax event occurs when we receive an opinion from tax counsel stating
that, for United States federal income tax purposes, there is more than an
insubstantial risk that all or a portion of the interest, including original
issue discount, payable on the debentures would not be deductible by us either
(A) on a current accrual basis or (B) under any other method, as a result of
either:

     - any amendment, change or announced prospective change in the laws or
       regulations of the United States or any of its political subdivisions or
       taxing authorities; or

     - any amendment, change, interpretation or application of the laws or
       regulations by any legislative body, court, government agency or
       regulatory authority.

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EVENTS OF DEFAULT; NOTICE AND WAIVER

     If an event of default has occurred and is continuing, the indenture
provides that either the trustee or the holders of at least 25% in aggregate
principal amount at maturity of the debentures then outstanding may declare due
and payable:

     - the issue price of the debentures (or, if the debentures are converted to
       interest-bearing debentures following a tax event, the Restated Principal
       Amount); plus

     - original issue discount accrued and unpaid on the debentures to the date
       of the declaration (or, if the debentures are converted to
       interest-bearing debentures following a tax event, interest accrued and
       unpaid on the debentures to the date of the declaration); plus

     - any Additional Interest owing under the Registration Rights Agreement.

     In the case of certain events of bankruptcy or insolvency, the issue price
plus original issue discount accrued and unpaid on the debentures to the date of
the event (or, if the debentures are converted to interest-bearing debentures
following a tax event, the Restated Principal Amount plus interest accrued and
unpaid on the debentures to the date of the event) will automatically become
immediately due and payable.

     Under circumstances specified in the indenture, the holders of a majority
in aggregate principal amount at maturity of the outstanding debentures may
rescind any acceleration of the debentures so that they will not become
immediately due and payable.

     Cash interest will accrue at the rate of 4.75% per annum and be payable on
demand upon a default in the payment of any redemption price or purchase price
and, after acceleration, of the issue price plus accrued original issue discount
(or, if the debentures are converted to interest-bearing debentures following a
tax event, Restated Principal Amount plus accrued interest) to the extent such
payment of the interest is legally enforceable. Original issue discount or, if
the debentures are converted to semiannual coupon debentures following the
occurrence of a tax event, interest on the debentures (except as provided in the
first sentence of this paragraph) will cease to accrue after declaration of
acceleration.

     The following constitute events of default under the indenture with respect
to the debentures:

          (1) our failure to pay any of the following when each becomes due and
     payable:

        - the principal amount of the debentures (or, if the debentures have
          been converted to interest-bearing debentures following a tax event,
          the Restated Principal Amount) at stated maturity;

        - the issue price;

        - accrued and unpaid original issue discount (or, if the debentures have
          been converted to interest-bearing debentures following a tax event,
          accrued and unpaid interest);

        - redemption price;

        - repurchase price; or

        - Fundamental Change purchase price;

          (2) our failure for 30 days to pay any Additional Interest (under the
     Registration Rights Agreement) due to all holders of registrable securities
     or interest (assuming conversion of the debentures to interest-bearing
     debentures following a tax event) due on the debentures;

          (3) our failure to comply with any of our covenants or agreements set
     forth in the indenture or the debentures for 90 days after written notice
     by the trustee or by the holders of at least 25% in principal amount at
     maturity of the outstanding debentures;

          (4) certain events involving our bankruptcy, insolvency or
     reorganization.

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   30

     The trustee will give notice to the debenture holders of any continuing
default known to the trustee within 90 days after it occurs. However, the
trustee may withhold notice to the debenture holders of any default or event of
default, except for defaults in any payment on the debentures, if the trustee
considers it in the best interest of the debenture holders to do so.

     The holders of a majority in aggregate principal amount at maturity of the
outstanding debentures may direct the time, place and method of conducting any
proceeding for any remedy available to the trustee or exercising any trust or
power conferred on the trustee. However, such direction may not conflict with
any law or the indenture and will be subject to certain other limitations.
Before exercising any right or power under the indenture at the direction of the
debenture holders, the trustee will be entitled to receive security or indemnity
satisfactory to the trustee against the costs, expenses and liabilities incurred
by the trustee in complying with the direction of the debenture holders. No
debenture holder will have any right to pursue any remedy with respect to the
indenture or the debentures unless:

          (1) the debenture holder has previously given us and the trustee
     written notice of a continuing event of default;

          (2) the holders of at least 25% in aggregate principal amount at
     maturity of the outstanding debentures have made a written request to the
     trustee to pursue the remedy;

          (3) the debenture holder or holders have offered the trustee indemnity
     satisfactory to the trustee;

          (4) the holders of a majority in aggregate principal amount at
     maturity of the outstanding debentures have not given the trustee a
     direction inconsistent with the request within 60 days of the trustee's
     receipt of the request; and

          (5) the trustee has failed to comply with the request within a 60-day
     period.

     However, none of the following rights of any debenture holder may be
impaired or adversely affected without the debenture holder's consent:

          (1) the right to receive payments of principal (including the issue
     price and accrued original issue discount) or Additional Interest (as
     defined in the Registration Rights Agreement), interest in respect of any
     default in payment under a debenture on or after the due date;

          (2) the right to institute suit for the enforcement of any payments or
     conversion; or

          (3) the right to convert debentures.

     The holders of at least a majority in aggregate principal amount at
maturity of the outstanding debentures may waive an existing default and its
consequences, other than:

     - any default in any payment on the debentures;

     - any default with respect to the conversion rights of the debentures; or

     - any default in respect of certain covenants or provisions in the
       indenture which may not be modified without the consent of the holder of
       each debenture as described under the caption entitled "-- Modification
       and Waiver" below.

     We will be required to furnish to the trustee annually a statement as to
any default by us in the performance and observance of our obligations under the
indenture.

MODIFICATION AND WAIVER

     We may amend, modify or supplement the indenture with the consent of the
holders of not less than majority in aggregate principal amount at maturity of
all outstanding debentures. Notwithstanding the foregoing, no amendment may,
without the consent of each holder affected:

          (1) reduce the principal amount at maturity, issue price, redemption
     price, repurchase price or Fundamental Change purchase price;

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   31

          (2) extend the stated maturity of any debenture;

          (3) alter the manner or rate of accrual of original issue discount,
     Additional Interest (under the Registration Rights Agreement), interest, if
     any;

          (4) make any debenture payable in money or securities of a type other
     than that stated in the debentures;

          (5) impair the right to institute suit for payment under, or
     conversion of, the debentures;

          (6) reduce the percentage in principal amount at maturity of the
     outstanding debentures the consent of whose holders (A) is required for any
     such amendment, modification or supplement, or (B) is required for any
     waiver provided for in the indenture;

          (7) reduce the quorum or voting requirements under the indenture;

          (8) change any obligation of Atmel to maintain an office or agency in
     the places and for the purposes specified in the indenture;

          (9) make any change that adversely affects the right to convert any
     debenture or the right to require us to repurchase a debenture or the right
     to require us to repurchase a debenture upon a Fundamental Change;

          (10) modify the provisions of the indenture affecting the
     subordination of the indentures in a manner adverse to the debenture
     holders; or

          (11) subject to specified exceptions, modify certain of the provisions
     of the indenture relating to modification or waiver of provisions of the
     indenture.

     The indenture also provides for certain modifications of its terms without
the consent of the holders.

FORM, EXCHANGE, REGISTRATION AND TRANSFER

     The debentures were issued in registered form, without interest coupons. We
will not charge a service charge for any registration of transfer or exchange of
the debentures. We may, however, require the payment of any tax or other
governmental charge payable for that registration.

     Debentures are exchangeable for other debentures, for the same total
principal amount and for the same terms but in different authorized
denominations in accordance with the indenture. Holders may present debentures
for registration of transfer at the office of the security registrar or any
transfer agent we designate. The security registrar or transfer agent will
effect the transfer or exchange when it is satisfied with the documents of title
and identity of the person making the request.

     We have appointed the trustee as security registrar for the debentures. We
may at any time rescind that designation or approve a change in the location
through which any registrar acts. We are required to maintain an office or
agency for transfers and exchanges in each place of payment. We may at any time
designate additional registrars for the debentures.

     In the case of any redemption, the security registrar will not be required
to register the transfer or exchange of any debenture either:

     - during a period beginning 15 business days prior to the expected mailing
       of the relevant notice of redemption and ending on the close of business
       on the day of mailing of such notice; or

     - if the debentures have been called for redemption, in whole or in part,
       except the unredeemed portion of any debenture being redeemed in part.

PAYMENT AND PAYING AGENTS

     Payments on the debentures not made in shares of our common stock will be
made in U.S. dollars at the office of the trustee. At our option, however, we
may make payments by check mailed to the holder's

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registered address or, with respect to global debentures, by wire transfer. We
will make interest payments to the person in whose name the debenture is
registered at the close of business on the record date for the interest payment.

     We initially designated the trustee as our paying agent for payments on
debentures. We may at any time designate additional paying agents or rescind the
designation of any paying agent or approve a change in the office through which
any paying agent acts.

     Subject to the requirements of any applicable abandoned property laws, the
trustee and paying agent shall pay to us upon written request any money held by
them for payments on the debentures that remain unclaimed for two years after
the date upon which that payment has become due. After payment to us, holders
entitled to the money must look to us for payment. In that case, all liability
of the trustee or paying agent with respect to that money will cease.

BOOK-ENTRY SYSTEM

     The debentures are represented by one or more global securities (each a
"global security"). Each global security was deposited with, or on behalf of,
The Depository Trust Company and registered in the name of a nominee of DTC.
Except under circumstances described below, the debentures will not be issued in
definitive form.

     Upon the issuance of each global security, DTC credited on its book-entry
registration and transfer system the accounts of persons designated by the
initial purchasers with the respective principal amounts of the debentures
represented by the global security. Ownership of beneficial interests in a
global security will be limited to persons that have accounts with DTC or its
nominee ("participants") or persons that may hold interests through
participants. Ownership of beneficial interests in a global security will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by DTC or its nominee (with respect to interests of persons
other than participants). The laws of some states require that certain
purchasers of securities take physical delivery of the securities in definitive
form. Such limits and such laws may impair the ability to transfer beneficial
interests in a global security.

     So long as DTC or its nominee is the registered owner of a global security,
DTC or its nominee, as the case may be, will be considered the sole owner or
holder of the debentures represented by that global security for all purposes
under the indenture. Except as provided below, owners of beneficial interests in
a global security will not be entitled to have debentures represented by that
global security registered in their names, will not receive or be entitled to
receive physical delivery of debentures in definitive form and will not be
considered the owners or holders thereof under the indenture. Principal and
interest payments, if any, or payments of the redemption price or the purchase
price on debentures registered in the name of DTC or its nominee will be made to
DTC or its nominee, as the case may be, as the registered owner of the relevant
global security. Neither we, the trustee, any paying agent nor the registrar for
the debentures will have any responsibility or liability for any aspect of the
records relating to, nor payments made on account of, beneficial interests in a
global security or for maintaining, supervising or reviewing any records
relating to such beneficial interests.

     We expect that DTC or its nominee, upon receipt of any payment of principal
or interest, if any, or payments of the redemption price or the purchase price
will credit immediately participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of the relevant global security as shown on the records of DTC or its nominee.
We also expect that payments by participants to owners of beneficial interests
in a global security held through such participants will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such participants.

     If DTC is at any time unwilling or unable to continue as a depositary and a
successor depositary is not appointed by us within 90 days, we will issue
debentures in definitive form in exchange for the entire global security for the
debentures. In addition, we may at any time and in our sole discretion determine

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   33

not to have debentures represented by a global security and, in such event, will
issue debentures in definitive form in exchange for the entire global security
relating to such debentures. In any such instance, an owner of beneficial
interest in a global security will be entitled to physical delivery in
definitive form of debentures represented by such global security equal in
principal amount to such beneficial interest and to have such debentures
registered in its name. Debentures so issued in definitive form will be issued
as registered debentures in denominations of $1,000 and integral multiples
thereof, unless otherwise specified by us.

     DTC has advised us that DTC is:

     - a limited purpose trust company organized under the laws of the State of
       New York;

     - a member of the Federal Reserve System;

     - a clearing corporation within the meaning of the Uniform Commercial Code;
       and

     - a clearing agency registered pursuant to the provisions of Section 17A of
       the Exchange Act.

     DTC was created to hold securities for its participants and to facilitate
the clearance and settlement of securities transactions between participants
through electronic book-entry changes to the accounts of its participants. This
practice eliminates the need for physical movement of certificates. Participants
include securities brokers and dealers, banks, trust companies and clearing
corporations and may include certain other organizations. Some of the
participants, or their representatives, together with other entities, own DTC.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through, or maintain a custodial
relationship with, a participant, either directly or indirectly.

     Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the global security among participants, it is under no
obligation to perform or continue to perform these procedures, and these
procedures may be discontinued at any time.

     Conveyance of notices and other communications by DTC to participants, by
participants to indirect participants and indirect participants to beneficial
owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements that may be in effect from time to time. Redemption
notices will be sent to Cede & Co., as nominee of DTC. If less than all of the
debentures are being redeemed, DTC will reduce the amount of interest of each
participant in the debentures in accordance with its procedures.

     Holders of debentures may not request certificated debentures and
certificated debentures will not be issued, except at our option or in exchange
for debentures represented by the global debenture if no successor depositary is
appointed by us as set forth above in the fifth paragraph under this caption.

     See the description under "Certain United States Federal Income Tax
Considerations" for a discussion of certain tax considerations relevant to a
holder of debentures.

REGISTRATION RIGHTS

     We have agreed pursuant to a Registration Rights Agreement with the initial
purchasers, for the benefit of the holders of the debentures and our common
stock issuable on conversion of the debentures, that we will, at our cost:

          (1) use our reasonable efforts to file, as promptly as practicable,
     but in any event within 90 days after the first date of initial issuance of
     the debentures, a registration statement, which we refer to as the "Shelf
     Registration Statement," covering resales of the "Registrable Securities"
     (as defined below);

          (2) use our reasonable efforts to cause the Shelf Registration
     Statement to be declared effective under the Securities Act as promptly as
     practicable, but no later than 180 days after the first date of initial
     issuance of the debentures; and

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   34

          (3) use our reasonable efforts to keep the Shelf Registration
     Statement effective after its effective date until the date which is the
     earlier of:

     - the second anniversary of the effective date of the registration
       statement or the expiration of such other holding period as may be
       applicable under Rule 144(k) under the Securities Act or any successor
       rule or regulation; and

     - such time as all of the Registrable Securities have been sold pursuant to
       the Shelf Registration Statement or transferred pursuant to Rule 144
       under the Securities Act.

     We filed the registration statement, of which this prospectus forms a part,
to satisfy our obligation to file the Shelf Registration Statement under the
Registration Rights Agreement. We use the term "Registrable Securities" to refer
to the debentures and the shares of our common stock issuable upon conversion of
the debentures until the earliest of:

     - the effective registration under the Securities Act and resale of all
       such securities in accordance with the registration statement;

     - the expiration of the applicable holding period under Rule 144(k), which
       is currently two years from the date the securities were acquired from
       the issuer or its affiliate; or

     - the sale of all such securities pursuant to Rule 144 under the Securities
       Act, or any similar provision then in force.

     Notwithstanding the foregoing, we will be permitted to suspend the use of
the prospectus that is part of the Shelf Registration Statement (without
incurring any obligation to pay Additional Interest) for:

     - 30 days in the aggregate for any three-month period; and

     - 90 days in the aggregate for any 12-month period.

     In the event of a material acquisition, financing, recapitalization or
other similar transaction, we may extend the period of suspension for an
additional 30 days, not to exceed 60 days in any three-month period. If we
suspend the use of the prospectus or extend the period of suspension, we will
provide all registered debenture holders with written notice thereof. We will
provide each debenture holder for whom the Shelf Registration Statement was
filed with:

     - copies of the prospectus that is a part of the Shelf Registration
       Statement; and

     - notice when the Shelf Registration Statement has become effective.

     We will also take certain other actions required to permit resales to third
parties of the debentures and shares of our common stock issuable on conversion
thereof. Beneficial holders selling securities pursuant to the Shelf
Registration Statement generally will be:

     - required to be named as selling securityholders in the related
       prospectus;

     - subject to the prospectus delivery requirements and civil liability
       provisions of the Securities Act; and

     - bound by certain provisions (including indemnification obligations) of
       the Registration Rights Agreement.

     "Additional Interest" will accrue on the debentures and any shares of our
common stock into which the debentures were previously converted that are, in
each case, Registrable Securities, if:

          (1) on or prior to the 180th day after the first date of initial
     issuance of the debentures, the Shelf Registration Statement has not been
     declared effective by the SEC; or

          (2) subject to our rights to suspend the use of the prospectus
     included in the Shelf Registration Statement as described above, after the
     Shelf Registration Statement has been declared effective, the Shelf
     Registration Statement ceases to be effective or usable in connection with
     resales of debentures

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   35

     and the common stock issuable upon the conversion thereof that are
     Registrable Securities in accordance with and during the periods specified
     in the Registration Rights Agreement.

     We refer to each event referred to in items (1) and (2) above as a
"Registration Default." If Additional Interest accrues under the Registration
Rights Agreement, it will accrue from and including the date on which each
Registration Default occurs up to but excluding the date on which the
Registration Default is cured at a rate of:

     - in respect of transfer of restricted debentures, 0.5% per annum of the
       principal amount at maturity of the debentures plus accrued but unpaid
       original issue discount (or, if the debentures have been converted to
       interest-bearing debentures following a tax event, accrued but unpaid
       interest); and

     - in respect of transfer of restricted shares of our common stock into
       which debentures have been converted, 0.5% per annum of the "applicable
       conversion price."

     The term "applicable conversion price" refers to the original issue price
of a debenture plus accrued original issue discount to the date of calculation
divided by the conversion rate as then in effect.

     Payment of Additional Interest constitutes liquidated damages and will not
give rise to an event of default under the indenture. We will have no other
liabilities with respect to our registration obligations for which Additional
Interest is provided.

     This summary of certain provisions of the registration rights agreement
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the registration rights
agreement, a copy of which is available from us upon request.

INFORMATION CONCERNING THE TRUSTEE

     We appointed State Street Bank and Trust Company of California, N.A., as
trustee under the indenture, and as paying agent, conversion agent, registrar
and custodian with regard to the debentures. State Street Bank and Trust Company
of California, N.A. is also the trustee for our Zero Coupon Convertible
Subordinated Debentures due 2018.

                                        33
   36

                          DESCRIPTION OF CAPITAL STOCK

     The authorized capital stock of Atmel consists of 1,600,000,000 shares of
common stock and 5,000,000 shares of preferred stock, 500,000 shares of which
are designated Series A preferred stock. The following summary of certain
provisions of our common stock and preferred stock does not purport to be
complete and is subject to, and qualified in its entirety by, the provisions of
our amended and restated certificate of incorporation, amended and restated
bylaws, and amended and restated preferred shares rights agreement, dated as of
October 18, 1999, which are incorporated by reference in the registration
statement of which this prospectus forms a part, and by the provisions of
applicable law.

COMMON STOCK

     The holders of shares of common stock are entitled to one vote per share on
all matters to be voted on by stockholders. Stockholders do not have cumulative
voting rights in the election of directors. Accordingly, holders of a majority
of the shares voting are able to elect all directors. Subject to preferences of
any preferred stock that may be issued in the future, the holders of Atmel
common stock are entitled to receive ratably such dividends, if any, as may be
declared by the board of directors out of funds legally available for that
purpose, as well as any distributions to the stockholders. In the event of
liquidation, dissolution or winding up of Atmel, holders of common stock are
entitled to share ratably in all assets remaining after payment of liabilities,
subject to the prior liquidation preference of any then outstanding preferred
stock. Holders of common stock have no preemptive or conversion rights or other
subscription rights. There are no redemption or sinking fund provisions
applicable to the Atmel common stock.

     We have issued the holders of our common stock certain rights to purchase
our Series A preferred stock pursuant to the amended and restated preferred
shares rights agreement that could delay, defer or prevent a change of control
of Atmel in a transaction not approved by the board of directors.

PREFERRED STOCK

     The Atmel board of directors has the authority, without further action by
the stockholders, to issue up to 5,000,000 shares of preferred stock in one or
more series, and to fix the rights, preferences, privileges and restrictions
thereof, and the number of shares constituting any series or the designation of
such series, subject to our obligation under the amended and restated preferred
shares rights agreement to use best efforts to keep reserved and authorized that
number of shares of Series A preferred stock sufficient to permit the exercise
in full of outstanding rights. The rights, preferences and privileges of our
preferred stock may include dividend rights, conversion rights, voting rights,
terms of redemption, liquidation preferences, and sinking fund terms, any or all
of which may be greater than the rights of common stock. The issuance of
preferred stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of delaying,
deferring or preventing a change in control of Atmel and could impair the voting
and other rights of the holders of our common stock. As of March 31, 2001, no
shares of preferred stock were issued and outstanding.

PROVISIONS OF DELAWARE LAW AND OUR CERTIFICATE OF INCORPORATION AND BYLAWS

     Our certificate of incorporation provides that Atmel elects not to be
governed by Section 203 of the Delaware General Corporation Law, so we are not
subject to the provisions of Section 203 regulating corporate takeovers. This
section prevents Delaware corporations from engaging, under limited
circumstances, in a business combination, which includes a merger or sale of
more than 10% of the corporation's assets, with any interested stockholder,
which is a stockholder who owns 15% or more of the corporation's outstanding
voting stock, as well as affiliates and associates of stockholders, for three
years following the date that the stockholder became an interested stockholder
unless certain conditions are met.

     Provisions of our certificate of incorporation and bylaws could have the
effect of making it more difficult for a third party to acquire control of
Atmel. These provisions require certain advance notice of stockholder proposals
and director nominations, and provide that no action may be taken by
stockholders
                                        34
   37

by written consent, no stockholder may cumulate votes in the election of
directors, and only the board of directors, the chairman or the president may
call special meetings of stockholders. These provisions may make it more
difficult for stockholders to take specific corporate actions and could have an
effect of delaying or preventing a change in control of Atmel.

TRANSFER AGENT AND REGISTRAR

     The transfer agent and registrar for our common stock is EquiServe, L.P.
Its address is 150 Royall Street, Canton, Massachusetts 02021, and its telephone
number is (781) 575-2000.

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            CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

     This section summarizes some of the U.S. federal income tax considerations
relating to the purchase, ownership, and disposition of the debentures and of
common stock into which the debentures may be converted. This summary does not
provide a complete analysis of all potential tax considerations. The information
provided below is based on existing authorities. These authorities may change,
or the Internal Revenue Service (the "IRS") might interpret the existing
authorities differently. In either case, the tax consequences of purchasing,
owning or disposing of debentures or common stock could differ from those
described below. The summary generally applies only to holders that hold the
debentures or common stock as "capital assets" (generally, for investment). The
summary generally does not address tax considerations that may be relevant to
particular investors because of their specific circumstances, or because they
are subject to special rules. Finally, the summary does not describe the effect
of the federal estate and gift tax laws or the effects of any applicable
foreign, state, or local laws.

     INVESTORS CONSIDERING THE PURCHASE OF DEBENTURES SHOULD CONSULT THEIR OWN
TAX ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO
THEIR PARTICULAR SITUATIONS AND THE CONSEQUENCES OF FEDERAL ESTATE OR GIFT TAX
LAWS, FOREIGN, STATE, OR LOCAL LAWS, AND TAX TREATIES.

ORIGINAL ISSUE DISCOUNT

     Because the debentures do not provide for payments of fixed periodic
interest, they will be sold at discount from their principal amount. Holders
will in effect receive interest at maturity, unless the debentures are converted
or redeemed before then, by receiving a principal amount greater than the issue
price of the debentures. Because this excess of principal over issue price is
economically equivalent to interest, the U.S. tax rules require that this amount
(referred to as "original issue discount," or "OID") be recognized as interest
income over the term of the debentures. The amount of accrued interest for each
period is determined under a constant yield method, so that the accrued interest
for any period equals a constant percentage of the holder's investment
(including the original purchase price of the debenture plus any previously
accrued interest). Because the holder's investment increases each period, the
amount of interest income for each period will increase as the debentures get
closer to maturity.

     We will be required to furnish annually to the IRS and to certain
noncorporate holders information regarding the amount of original issue discount
allocable to the year. For this purpose, we will use six-month accrual periods
that begin or end on the maturity date of the debentures.

MARKET DISCOUNT; ACQUISITION PREMIUM

     If a U.S. holder purchases a debenture at a discount that is greater than
the discount at which the debentures were initially issued (that is, the holder
pays an amount that is less than the sum of the issue price of the debenture and
previously accrued OID), the holder will generally be subject to special rules
that apply to "market discount." These rules will generally require the holder
to treat as ordinary income that portion of any gain recognized on a sale or
other disposition of debentures attributable to accrued market discount. The
market discount rules may require the deferral of deductions of any interest on
a borrowing incurred or continued to purchase or carry a debenture. The interest
deferral rule will not apply, however, if the holder elects to include market
discount in income currently as it accrues.

     If a U.S. holder purchases a debenture at a discount that is less than the
discount at which the debentures were initially issued (that is, the holder pays
an amount that is less than the principal amount but more than the sum of the
issue price and previously accrued OID), the holder will be allowed to reduce
the amount of OID that would otherwise be treated as interest income, to reflect
the "acquisition premium" paid by the holder.

SALE, EXCHANGE OR REDEMPTION OF THE DEBENTURES

     Except as described below, a holder will recognize capital gain or loss if
the holder disposes of debenture in a sale, redemption or exchange other than a
conversion of the debenture into common stock.

                                        36
   39

The holder's gain or loss will equal the difference between the proceeds
received by the holder and the holder's adjusted tax basis in the debenture. The
proceeds received by the holder will include the amount of any cash and the fair
market value of any other property received for the debenture. The holder's tax
basis in the debenture will generally equal the amount the holder paid for the
debenture, increased by previously accrued original issue discount. The gain or
loss recognized by a holder on a disposition of the debenture will be long-term
capital gain or loss if the holder held the debenture for more than one year.
Long-term capital gains of individual taxpayers are generally taxed at a maximum
rate of 20 percent. The deductibility of capital losses is subject to
limitation. If a holder purchased a debenture with market discount, however,
that portion of a holder's gain attributable to accrued market discount not
previously included in income will be treated as ordinary income rather than
capital gain, as described above under "Original Issue Discount."

     If a holder elects to exercise his option to tender debentures to us on a
May 23, 2006, May 23, 2011 or May 23, 2016 purchase date and we issue common
stock in satisfaction of all or part of the purchase price, the exchange of the
debentures for common stock should qualify as a reorganization for federal
income tax purposes. If we pay the purchase price solely in common stock, the
holder generally should not recognize any gain or loss. If we pay the purchase
price with a combination of common stock and cash, the holder would be required
to recognize any gain realized, but only to the extent of the cash received. The
holder would not be allowed to recognize any loss. Because the price we will pay
will equal the issue price plus accrued original issue discount, however, the
amount received by the holder should equal the holder's tax basis and the holder
should not realize any gain or loss. If we pay all or part of the purchase price
with common stock and the holder receives cash in lieu of a fractional share of
stock, the holder would be treated as if he received the fractional share and
then had the fractional share redeemed for the cash. The holder would recognize
capital gain or loss equal to the difference between the cash received and that
portion of his basis in the stock attributable to the fractional share. A
holder's initial tax basis in his common stock (including any fractional share)
should equal the holder's adjusted basis in the debentures tendered, increased
by the amount of gain recognized and decreased by the amount of cash received.
The holder's holding period for his common stock should include the period
during which the holder held his debentures. The holding period for common stock
attributable to original issue discount, however, might begin on the day
following the exchange date.

CONVERSION OF THE DEBENTURES

     A holder generally will not recognize any income, gain or loss on
converting a debenture into common stock. If the holder receives cash in lieu of
a fractional share of stock, however, the holder would be treated as described
in the preceding paragraph. The holder's holding period for the stock will
include the period during which he or she held the debenture. The holding period
for common stock attributable to original issue discount, however, might begin
on the day following conversion.

DIVIDENDS

     If, after a holder converts a debenture into common stock, we make a
distribution in respect of that stock, the distribution will be treated as a
dividend, taxable to the holder as ordinary income, to the extent it is paid
from our current or accumulated earnings and profits. If the distribution
exceeds our current and accumulated profits, the excess will be treated first as
a tax-free return of the holder's investment, up to the holder's basis in its
common stock. Any remaining excess will be treated as capital gain. If the
holder is a U.S. corporation, it would generally be able to claim a deduction
equal to a portion of any dividends received.

     The terms of the debentures allow for changes in the conversion rate of the
debentures in certain circumstances. A change in conversion price that allows
debentureholders to receive more shares of common stock on conversion may
increase the debentureholders' proportionate interests in our earnings and
profits or assets. In that case, the debentureholders would be treated as though
they received a dividend in the form of our stock. Such a constructive stock
dividend could be taxable to the debentureholders, although they would not
actually receive any cash or other property. A taxable
                                        37
   40

constructive stock dividend would result, for example, if the conversion rate is
adjusted to compensate debentureholders for distributions of cash or property to
our shareholders. Not all changes in conversion rate that allow debentureholders
to receive more stock on conversion, however, increase the debentureholders'
proportionate interests in the company. For instance, a change in conversion
rate could simply prevent the dilution of the debentureholders' interests upon a
stock split or other change in capital structure. Changes of this type, if made
by a bona fide, reasonable adjustment formula, are not treated as constructive
stock dividends. Conversely, if an event occurs that dilutes the
debentureholders' interests and the conversion rate is not adjusted, the
resulting increase in the proportionate interests of our shareholders could be
treated as a taxable stock dividend to them. Any taxable constructive stock
dividends resulting from change to, or failure to change, the conversion rate
would be treated like dividends paid in cash or other property. They would
result in ordinary income to the recipient, to the extent of our current or
accumulated earnings and profits, with any excess treated as a tax-free return
of capital or as capital gain.

SALE OF COMMON STOCK

     A holder will generally recognize capital gain or loss on a sale or
exchange of common stock. The holder's gain or loss will equal the difference
between the proceeds received by the holder and the holder's adjusted tax basis
in the stock. The proceeds received by the holder will include the amount of any
cash and the fair market value of any other property received for the stock. The
gain or loss recognized by a holder on a sale or exchange of stock will be
long-term capital gain or loss if the holder held the stock for more than one
year. In the case of individuals, long-term capital gains are generally taxed at
a maximum rate of 20 percent, while the deductibility of capital losses is
subject to limitation. If a holder purchased debentures with market discount,
the holder would be required to treat as ordinary income that portion of any
gain recognized on a sale of the common stock received on conversion of the
debentures attributable to market discount accrued before the conversion and not
previously included in income.

BACKUP WITHHOLDING AND INFORMATION REPORTING

     The Internal Revenue Code and the Treasury regulations require those who
make specified payments to report the payments to the IRS. Among the specified
payments are interest, dividends, and proceeds paid by brokers to their
customers. The required information returns enable the IRS to determine whether
the recipient properly included the payments in income. This reporting regime is
reinforced by "backup withholding" rules. These rules require the payors to
withhold tax at a 31 percent rate from payments subject to information reporting
if the recipient fails to cooperate with the reporting regime by failing to
provide his taxpayer identification number to the payor, furnishing an incorrect
identification number, or repeatedly failing to report interest or dividends on
his returns. The information reporting and backup withholding rules do not apply
to payments to corporations, whether domestic or foreign.

     Payments of dividends to individual holders of common stock will generally
be subject to information reporting, and will be subject to backup withholding
unless the holder provides us or our paying agent with correct taxpayer
identification number.

     Payments made to holders by a broker upon a sale of debentures or common
stock will generally be subject to information reporting and backup withholding.
If, however, the sale is made through a foreign office of a U.S. broker, the
sale will be subject to information reporting but not backup withholding. If the
sale is made through a foreign office of a foreign broker, the sale will
generally not be subject to either information reporting or backup withholding.
This exception may not apply, however, if the foreign broker is owned or
controlled by U.S. persons, or is engaged in a U.S. trade or business.

     Any amounts withheld from payment to a holder of debentures or common stock
under the backup withholding rules can be credited against any U.S. federal
income tax liability of the holder.

TAX EVENT

     The modification of the terms of the debentures by us upon a tax event as
described in "Description of Debentures -- Optional Conversion to Semiannual
Coupon Debentures Upon a Tax Event, "could alter
                                        38
   41

the timing of income recognition by the holders regarding the semiannual
payments of interest due after the option exercise date.

     THE PRECEDING DISCUSSION OF CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
IS FOR GENERAL INFORMATION ONLY. IT IS NOT TAX ADVICE. EACH PROSPECTIVE INVESTOR
SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE PARTICULAR U.S. FEDERAL, STATE,
LOCAL, AND FOREIGN TAX CONSEQUENCES OF PURCHASING, HOLDING, AND DISPOSING OF OUR
DEBENTURES OR COMMON STOCK, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN
APPLICABLE LAWS.

                                        39
   42

                            SELLING SECURITYHOLDERS

     We originally issued the debentures in a private placement in May 2001. The
debentures were resold by the initial purchasers to qualified institutional
buyers under Rule 144A under the Securities Act in transactions exempt from
registration under the Securities Act. Selling securityholders may offer and
sell the debentures and the underlying common stock pursuant to this prospectus.

     The following table contains information as of July 16, 2001, with respect
to the selling securityholders and the principal amount of debentures and the
underlying common stock beneficially owned by each selling security holder that
may be offered using this prospectus.



                                           PRINCIPAL AMOUNT                     NUMBER OF
                                            AT MATURITY OF                      SHARES OF
                                              DEBENTURES       PERCENTAGE OF   COMMON STOCK   PERCENTAGE OF
                                          BENEFICIALLY OWNED    DEBENTURES     THAT MAY BE     COMMON STOCK
                  NAME                     THAT MAY BE SOLD     OUTSTANDING      SOLD(1)      OUTSTANDING(2)
                  ----                    ------------------   -------------   ------------   --------------
                                                                                  
Alexandra Global Investment Fund I,
  LTD...................................       5,000,000               *          114,915           *
Alta Partners Holdings, LDC.............      26,000,000            5.08%         597,558           *
Aventis Pension Master Trust............         340,000               *            7,814           *
Bank Austria Cayman Island, Ltd. .......  6,000,000.....            1.17%         137,898           *
Bear Stearns & Co., Inc.................       1,250,000               *           28,729           *
Boilermaker-Blacksmith Pension Trust....       2,150,000               *           49,413           *
CALAMOS(R) Convertible Fund --
  CALAMOS(R) Investment Trust...........       8,000,000            1.56%         183,864           *
CALAMOS(R) Convertible Growth and Income
  Fund -- CALAMOS(R) Investment Trust...       3,500,000               *           80,441           *
CALAMOS(R) Convertible Portfolio --
     CALAMOS(R) Advisors Trust..........         200,000               *            4,597           *
CALAMOS(R) Convertible Technology
  Fund -- CALAMOS(R) Investment Trust...          55,000               *            1,264           *
CALAMOS(R) Global Convertible Fund --
  CALAMOS(R) Investment Trust...........         225,000               *            5,171           *
CFFX, LLC...............................       9,690,000            1.89%         222,705           *
City of Albany Pension Plan.............         190,000               *            4,367           *
City of Knoxville Pension System........         440,000               *           10,113           *
Clarica Life Insurance Co. -- U.S. .....         535,000               *           12,296           *
The Cockrell Foundation.................         200,000               *            4,597           *
Commerzbank Financial Products
  Frankfurt.............................      25,000,000            4.89%         574,575           *
Delta Airlines Master Trust.............       3,700,000               *           85,037           *
Delta Pilots Disability and Survivorship
  Trust.................................         720,000               *           16,548           *
Dorinco Reinsurance Company.............       2,250,000               *           51,712           *
The Dow Chemical Company Employee's
  Retirement Plan.......................       4,200,000               *           96,529           *
Drury University........................          70,000               *            1,609           *
Fidelity Financial Trust: Fidelity
  Convertible Securities Fund...........      18,300,000            3.58%         420,589           *
Fidelity Securities Fund: Fidelity
  Advisor Aggressive Growth Fund........         550,000               *           12,641           *
First Union National Bank...............      32,000,000            6.26%         735,456           *
The Fondren Foundation..................         130,000               *            2,988           *
Global Bermuda Limited Partnership......         750,000               *           17,237           *
H. K. Porter Company, Inc. .............          50,000               *            1,149           *
J.P. Morgan Securities, Inc. ...........      17,500,000            3.42%         402,203           *


                                        40
   43



                                           PRINCIPAL AMOUNT                     NUMBER OF
                                            AT MATURITY OF                      SHARES OF
                                              DEBENTURES       PERCENTAGE OF   COMMON STOCK   PERCENTAGE OF
                                          BENEFICIALLY OWNED    DEBENTURES     THAT MAY BE     COMMON STOCK
                  NAME                     THAT MAY BE SOLD     OUTSTANDING      SOLD(1)      OUTSTANDING(2)
                  ----                    ------------------   -------------   ------------   --------------
                                                                                  
KBC Financial Products USA..............       1,000,000               *           22,983           *
Kentfield Trading, Ltd. ................      11,700,000            2.29%         268,901           *
Kettering Medical Center Funded
  Depreciation Account..................         130,000               *            2,988           *
Knoxville Utilities Board Retirement
  System................................         300,000               *            6,895           *
L.A. Fire and Police Pension Fund.......      19,900,000            3.89%         457,362           *
Lakeshore International Ltd.............       1,750,000               *           40,220           *
Lincoln National Global Asset Allocation
  Fund, Inc.............................         230,000               *            5,286           *
Lydian Overseas Partners Master Fund....      12,500,000            2.44%         287,288           *
Louisiana Workers' Compensation
  Corporation...........................         290,000               *            6,665           *
Merrill Lynch Investment Managers --
  Quantitative Advisors.................      25,000,000            4.89%         574,575           *
MFS Total Return Fund...................      10,400,000            2.03%         239,023           *
Morgan Stanley & Co.(3).................      75,000,000           14.66%       1,723,725           *
Museum of Fine Arts, Boston.............          40,000               *              919           *
New York Life Insurance and Annuity
  Corporation...........................       3,700,000               *           85,037           *
New York Life Insurance Company.........      23,100,000            4.52%         530,907           *
Onyx Fund Holdings, LDC.................       7,500,000            1.47%         172,373           *
Parker-Hannifin Corporation.............         370,000               *            8,504           *
Pitney Bowes Retirement Plan............       5,100,000            1.00%         117,213           *
Port Authority of Allegheny County
  Retirement and Disability Allowance
  Plan for the Employees Represented by
  Local 85 of the Amalgamated Trust
  Company...............................       2,200,000               *           50,563           *
Putnam Asset Allocation
  Funds -- Balanced Portfolio...........       1,850,000               *           42,519           *
Putnam Asset Allocation Funds --
  Conservative Portfolio................       1,420,000               *           32,636           *
Putnam Convertible Income -- Growth
  Trust.................................      13,850,000            2.71%         318,315           *
Putnam Convertible Opportunities and
  Income Trust..........................         490,000               *           11,262           *
Putnam Variable Trust -- Putnam VT
  Global Asset Allocation Fund..........         490,000               *           11,262           *
Ramius Capital Group....................       1,500,000               *           34,475           *
RCG Latitude Master Fund................  2,500,000.....               *           57,458           *
Salomon Brothers Asset Management,
  FNC. .................................      12,500,000            2.44%         287,288           *
SCI Endowment Care Common Trust
  Fund -- National Fiduciary Services...         625,000               *           14,364           *
SCI Endowment Care Common Trust
  Fund -- Suntrust......................          70,000               *            1,609           *
Southern Farm Bureau Life Insurance
  Company...............................       2,000,000               *           45,966           *
SPT.....................................       1,700,000               *           39,071           *
TQA Master Fund Ltd.....................       2,500,000               *           57,458           *
TQA Master Plus Fund Ltd................       1,500,000               *           34,475           *


                                        41
   44



                                           PRINCIPAL AMOUNT                     NUMBER OF
                                            AT MATURITY OF                      SHARES OF
                                              DEBENTURES       PERCENTAGE OF   COMMON STOCK   PERCENTAGE OF
                                          BENEFICIALLY OWNED    DEBENTURES     THAT MAY BE     COMMON STOCK
                  NAME                     THAT MAY BE SOLD     OUTSTANDING      SOLD(1)      OUTSTANDING(2)
                  ----                    ------------------   -------------   ------------   --------------
                                                                                  
UBKAM Arbitrage Fund....................       1,125,000               *           25,856           *
UBS O'Connor F/B/O O'Connor Global
  Convertible Portfolio.................       1,600,000               *           36,773           *
UBS O'Connor F/B/O UBS Global Equity
  Arbitrage Master Ltd. ................      18,400,000            3.60%         422,887           *
Unifi, Inc. Profit Sharing Plan and
  Trust.................................         200,000               *            4,597           *
Union Carbide Retirement Account........       4,800,000               *          110,318           *
United Food and Commercial Workers Local
  1262 and Employers Pension Fund.......       1,000,000               *           22,983           *
Van Waters & Rogers, Inc. Retirement
  Plan..................................         580,000               *           13,330           *
Variable Insurance Products Fund III:
  Aggressive Growth Portfolio...........          80,000               *            1,839           *
White River Securities L.L.C. ..........       8,750,000            1.71%         201,101           *
Any other holder of Debentures or future
  transferee, pledgee, donee or
  successor of any holder (4)(5)........      62,765,000           12.27%       1,442,528           *


- -------------------------
 *  Less than 1%.

(1) Assumes conversion of all of the holder's debentures at a conversion price
    of $17.02 per share of common stock. However, this conversion price will be
    subject to adjustment as described under "Description of Debentures -- Right
    of Conversion." As a result, the amount of common stock issuable upon
    conversion of the debentures may increase or decrease in the future. Under
    the terms of the Indenture, cash will be paid in lieu of issuing fractional
    shares, if any, upon conversion of the debentures.

(2) Calculated based on Rule 13d-3(d)(1)(i) of the Exchange Act using
    463,708,515 shares of common stock outstanding as of March 31, 2001. In
    calculating this amount, we treated as outstanding the number of shares of
    common stock issuable upon conversion of all of that particular holder's
    debentures. However, we did not assume the conversion of any other holder's
    debentures.

(3) Does not include 369,710 shares of common stock issuable upon conversion of
    $6,610,000 in principal amount at maturity of our Zero Coupon Convertible
    Subordinated Debentures due 2018 beneficially owned by Morgan Stanley & Co.

(4) Information about other selling security holders will be set forth in
    prospectus supplements, if required.

(5) Assumes that any other holders of debentures, or any future transferees,
    pledgees, donees or successors of or from any such other holders of
    debentures, do not beneficially own any common stock other than the common
    stock issuable upon conversion of the debentures at the initial conversion
    rate.

     We prepared this table based on the information supplied to us by the
selling securityholders named in the table. Unless otherwise indicated, none of
the selling securityholders has, or within the past three years has had, any
position, office or other material relationship with us or our affiliates. From
time to time, Morgan Stanley & Co. Incorporated and Merrill Lynch, Pierce Fenner
& Smith Incorporated, or their affiliates, have provided, and may continue to
provide us with investment banking services, for which they received or will
receive customary fees.

     The selling securityholders listed in the above table may have sold or
transferred, in transactions exempt from the registration requirements of the
Securities Act, some or all of their debentures since the

                                        42
   45

date on which the information in the above table is presented. Information about
the selling securityholders may change from over time. Any changed information
will be set forth in prospectus supplements.

     Because the selling securityholders may offer all or some of their
debentures or the underlying common stock from time to time, we cannot estimate
the amount of the debentures or underlying common stock that will be held by the
selling securityholders upon the termination of any particular offering. See
"Plan of Distribution."

                                        43
   46

                              PLAN OF DISTRIBUTION

     We will not receive any of the proceeds of the sale of the debentures or
the underlying common stock offered by this prospectus. The debentures and the
underlying common stock may be sold from time to time to purchasers:

     - directly by the selling securityholders;

     - through underwriters, broker-dealers or agents who may receive
       compensation in the form of discounts, concessions or commissions from
       the selling securityholders or the purchasers of the debentures and the
       underlying common stock.

     The selling securityholders and any such broker-dealers or agents who
participate in the distribution of the debentures and the underlying common
stock may be deemed to be "underwriters." As a result, any profits on the sale
of the debentures and underlying common stock by selling securityholders and any
discounts, commissions or concessions received by any such broker-dealers or
agents might be deemed to be underwriting discounts and commissions under the
Securities Act. If the selling securityholders were to be deemed underwriters,
the selling securityholders may be subject to certain statutory liabilities of,
including, but not limited to, Sections 11, 12 and 17 of the Securities Act and
Rule 10b-5 under the Exchange Act.

     If the debentures and underlying common stock are sold through underwriters
or broker-dealers, the selling securityholders will be responsible for
underwriting discounts or commissions or agent's commissions.

     The debentures and underlying common stock may be sold in one or more
transactions at:

     - fixed prices;

     - prevailing market prices at the time of sale;

     - varying prices determined at the time of sale; or

     - negotiated prices.

     These sales may be effected in transactions:

     - on any national securities exchange or quotation service on which the
       debentures and underlying common stock may be listed or quoted at the
       time of the sale, including the Nasdaq National Market System in the case
       of the common stock;

     - in the over-the-counter market;

     - in transactions otherwise than on such exchanges or services or in the
       over-the-counter market; or

     - through the writing of options.

     These transactions may include block transactions or crosses. Crosses are
transactions in which the same broker acts as an agent on both sides of the
trade.

     In connection with sales of the debentures and underlying common stock or
otherwise, the selling securityholders may enter into hedging transactions with
broker-dealers. These broker-dealers may in turn engage in short sales of the
debentures and underlying common stock in the course of hedging their positions.
The selling securityholders may also sell the debentures and underlying common
stock short and deliver debentures and underlying common stock to close out
short positions, or loan or pledge debentures and underlying common stock to
broker-dealers that in turn may sell the debentures and underlying common stock.

     To our knowledge, there are currently no plans, arrangement or
understandings between any selling securityholders and any underwriter,
broker-dealer or agent regarding the sale of the debentures and the underlying
common stock by the selling securityholders. Selling securityholders may not
sell any or all of the debentures and the underlying common stock offered by
them pursuant to this prospectus. Any selling
                                        44
   47

securityholder may instead transfer, devise or gift the debentures and the
underlying common stock by other means not described in this prospectus. In
addition, any debentures or underlying common stock covered by this prospectus
that qualify for sale pursuant to Rule 144 or Rule 144A of the Securities Act
may be sold under Rule 144 or Rule 144A rather than pursuant to this prospectus.

     Our common stock trades on the Nasdaq National Market under the symbol
"ATML." No assurance can be given as to the development of liquidity or any
trading market for the debentures. See "Risk Factors -- A public market may not
develop for the debentures."

     The selling securityholders and any other person participating in such
distribution will be subject to the Exchange Act. The Exchange Act rules
include, without limitation, Regulation M, which may limit the timing of
purchases and sales of any of the debentures and the underlying common stock by
the selling securityholders and any other such person. In addition, Regulation M
of the Exchange Act may restrict the ability of any person engaged in the
distribution of the debentures and the underlying common stock to engage in
market-making activities with respect to the particular debentures and the
underlying common stock being distributed for a period of up to five business
days prior to the commencement of such distribution. This may affect the
marketability of the debentures and the underlying common stock and the ability
of any person or entity to engage in market-making activities with respect to
the debentures and the underlying common stock.

     Pursuant to the registration rights agreement filed as an exhibit to this
registration statement, we and the selling securityholders will be indemnified
by the other against certain liabilities, including certain liabilities under
the Securities Act or will be entitled to contribution in connection with these
liabilities.

     We have agreed to pay substantially all of the expenses incidental to the
registration, offering and sale of the debentures and underlying common stock to
the public other than commissions, fees and discounts of underwriters, brokers,
dealers and agents.

                                        45
   48

                                 LEGAL MATTERS

     The validity of the issuance of the securities offered hereby will be
passed upon for Atmel by Wilson Sonsini Goodrich & Rosati, Professional
Corporation, Palo Alto, California.

                                    EXPERTS

     The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K for the year ended December 31,
2000, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

                      WHERE YOU CAN FIND MORE INFORMATION

     We file reports, proxy statements and other information with the
Commission, in accordance with the Securities Exchange Act of 1934. You may read
and copy our reports, proxy statements and other information filed by us at the
public reference facilities of the Commission in Washington, D.C., New York, New
York and Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for
further information about the public reference rooms. Our reports, proxy
statements and other information filed with the Commission are available to the
public over the Internet at the Commission's World Wide Web site at
http://www.sec.gov. Our web address is http://www.atmel.com.

     The information incorporated by reference is considered to be a part of
this prospectus, and information that we file later with the Commission will
automatically update and supersede this information. We incorporate by reference
the documents listed below and any future filings made by us with the Commission
under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until our offering
is complete.

     - The description of our Preferred Shares Rights Agreement, in our
       Registration Statement on Form 8-A/12G filed on September 15, 1998, as
       amended on Form 8-A/12G/A filed on December 6, 1999, under Section 12(g)
       of the Exchange Act;

     - Our Annual Report on Form 10-K for the fiscal year ended December 31,
       2000;

     - Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2001;

     - Our definitive Proxy Statement on Schedule 14A filed on March 15, 2001;
       and

     - Our Current Reports on Form 8-K, dated May 17, 2001 and May 18, 2001.

     Any statement contained in a document that is incorporated by reference
will be modified or superseded for all purposes to the extent that a statement
contained in this prospectus (or in any other document that is subsequently
filed with the Commission and incorporated by reference) modifies or is contrary
to that previous statement. Any statement so modified or superseded will not be
deemed a part of this prospectus except as so modified or superseded.

     You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address: Investor Relations, Atmel Corporation,
2325 Orchard Parkway, San Jose, California 95131, (408) 441-0311.

                           TRADEMARK ACKNOWLEDGEMENTS

     Atmel and the Atmel logo design are trademarks of Atmel. All other brand
and product names appearing in this prospectus are the trademarks of their
respective companies.

                                        46