Frost & Sullivan Lauds Atmel for Exceptional Growth Strategy Leadership in the World Smart Card IC Market

Frost & Sullivan Lauds Atmel for Exceptional Growth Strategy Leadership in the World Smart Card IC Market

LONDON, September 28, 2006–The 2006 Frost & Sullivan Growth Strategy Leadership Award is presented to Atmel for its outstanding performance in the world smart card IC market in 2005. In particular, the company is commended for its performance in the microcontroller market where strategies designed around price, technology development, constant product innovations, and marketing enabled Atmel to consolidate its second position. An expanding portfolio–both products and applications–as well as a growing presence in the banking market further underline Atmel’s receipt of this award.

“Within the smart card IC market, Atmel has made steady progress, consistently surpassing the average market growth over the past five years,” notes Frost & Sullivan Smart Card Global Programme Manager, Anoop Ubhey. “The last three years have yielded growth levels in excess of 70 per cent, marking a phenomenal performance by the company.”

In a short span of four years, Atmel doubled its market share in the total smart card microcontroller IC market, capturing 10.4 per cent of the market in 2003. Sales of microcontroller units increased significantly with the company registering growth levels of approximately 39.0 per cent in 2002, 121.0 per cent in 2003, 94.0 per cent in 2004 and 72.0 per cent in 2005.

“Atmel’s flexibility, adaptability and forward thinking supported its rise to the second position in the smart card microcontroller IC market in terms of units,” explains Mr. Ubhey. “Having the right level of adaptability has allowed the company to address changing market needs and capitalise on emergent challenges.”

With the aim of increasing its market share in terms of units, Atmel devised a strategy to offer lower-end products in Asia, especially in the SIM arena, in 2004. The company targeted mass markets such as the Chinese SIM market, where it made rapid gains in market share. This strategy pushed the company’s average selling price (ASP) lower than the market average, but provided high returns in number of units and resulted in a growth rate of 94.0 per cent in unit sales in 2004.

After some exceptional marketing efforts, and aggressive pricing strategies, Atmel moved to find the right balance between ASP and units shipped. Hence, in 2005, the company surprised its competitors by expanding its target client base while, at the same time, securing stronger relationships with two of its biggest customers leading to higher IC shipments.

“As with many other market participants in the smart card market, Atmel was heavily dependent on the SIM market,” observes Mr. Ubhey. “Today, after a number of successful product developments and deployments, the company is in a more balanced position, providing ICs to many segments of the market.” In addition to continuing its growth in the SIM area, the company has also begun to experience a high level of shipments in the banking segment. While the SIM market catapulted Atmel above the majority of its competitors with a staggering 77.0 per cent growth in shipments over 2005, the banking segment accounted for nearly 11.0 per cent of all Atmel’s microcontroller shipments.

“This has led to the company gaining a healthier market share in the banking segment,” states Mr. Ubhey. “The company has achieved the qualification and specifications that were missing in 2004 and has managed to increase its perceived expertise in the security area- a segment where Atmel can expect to see further growth in the short to medium term.”

Frost & Sullivan’s Growth Strategy Leadership Award is presented each year to the company that has demonstrated an exceptional growth strategy within the industry.

Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global markets for demonstrating outstanding achievement and superior performance in areas such as leadership, technological innovation, customer service, and strategic product development. Industry analysts compare market participants and measure performance through in-depth interviews, analysis, and extensive secondary research in order to identify best practices in the industry.