Inside Contactless to acquire Atmel SMS
After completion of the information and consultation process with its Works Council, in accordance with French law, Atmel will seek authorization from its board of directors to enter into the purchase agreement with Inside, with the transaction expected to close in the third quarter of 2010, subject to certain closing conditions. Inside says the resulting organization will be the largest fabless semiconductor company in France, and one of the largest in Europe.
Atmel Secure Microcontroller Solutions, has been up for sale for a few months already. Atmel has announced its intention to pull out of some of its operations, and has already sold its fab in Rousset, France and East Kilbride, UK to LFoundry (cf. Smart Insights Weekly #10-02). Now, with this new transaction, Atmel totally exits European activities, and will be able to concentrate on design and manufacture of microcontrollers, capacitive sensing, advanced logic, mixed-signal, nonvolatile memory and radio frequency (RF) components. Estimations of Atmel SMS had been leaked in the past, allowing us to assess the transaction value to around US$ 100 million (EUR 75 million).
Created in 1995 Inside has established itself as the leader in the contactless secure transaction chips market: the company has delivered 400 million contactless platforms worldwide. Inside Contactless has also heavily invested in NFC, and holds an extensive IP portfolio on the subject, including 69 families of patents. Inside Contactless investors include Alta Berkeley, EuroUS Ventures, Gimv, GGV Capital, HID Global, Motorola, Nokia Growth Partners, Qualcomm, Samsung Ventures America, Siparex Group, Sofinnova Partners, Vertex Venture Capital, and Visa.
With this acquisition Inside Contactless with its 170 employees is acquiring another 170 employees, structure, but that has twice its sales level. The combination between Inside expertise in RF and contactless hardware and software, with Atmel classical semi conductor expertise will undoubtedly create one of the largest development teams in the whole secure transactions industry.
So far, Atmel was probably the second channel to market on EMV, after Infineon. But, as its future had been uncertain for a few years, the company had not invested as much as Infineon and NXP in developing a contactless expertise, and thus, was lacking an EMV dual interface offer. The acquisition by Inside will undoubtedly help to fill this gap. The acquisition will allow Inside to introduce the dual interface on the EMV range of products of Atmel.
The semi conductor market for payment is estimated to be about US$ 270 to 280 million (EUR 204 to 212 million) in 2010, that can be split in around US$ 220 million (EUR 166 million) of chips for contact EMV cards, and US$ 60 million (EUR 45 million) chips for contactless or dual interface cards. One may suppose, Inside Contactless with its new perimeter will be in a strong position on this market, with approximately a third of the market, more than Infineon, and close to NXP.