Notwithstanding the current environment, given the ongoing actions to transform the company, we believe we are well positioned to continue to enhance the company’s competitiveness and to outperform our peer group.

I would like to thank our employees who have stayed focused in providing Atmel’s customers with superior products and service, which allowed us, in Q4, to outperform our industry in revenue and to achieve the highest gross margin in over seven years.

Now let me turn the call back over to Stephen for discussions of our financial guidance for the fourth quarter.

Stephen Cumming

Thank you, Steve. In light of the uncertainty and limited visibility in the current macroeconomic environment, the company is not providing revenue guidance this time. For internal purposes, we are planning first quarter 2009 revenues to be approximately $290 million.

Looking at our internal expectations to gross margin, based on our lower revenues and reduced factory loadings, we expect our gross profit margins to be between 35% and 38% in the first quarter of 2009.

We continue to be very disciplined in our spending levels. Based on the dollar-euro exchange rate, we anticipate we will average approximately $1.35 in Q1. Operating expenses are expected to be approximately $114 million, plus or minus $2 million for the first quarter of 2009. First quarter capital expenditures are expected to be $5 million and between $25 million to $35 million for 2009.

Quantum acquisition related costs are expected to be approximately $4 million for Q1. In addition, the provision for income taxes is expected to be in the range of $2 to $4 million for the first quarter.

This concludes our prepared remarks. We will now open the call for your questions.

Question-and-Answer Session

Operator

(Operator Instructions).

Our first question is from the line of Craig Hettenbach with Goldman Sachs.

Craig Hettenbach - Goldman Sachs

Steve, you mentioned Touch as an area that you are pursuing aggressively for 2009. Can you just talk about Atmel's positioning with Quantum and ABR, and how that stands up to from other competitive offerings in the market place?

Steve Laub

Sure, so the areas that, these are sort of three major different areas of touch, there is, let’s consider, a touch screen, which is primarily, today, the large application area, is sort of a handset or smart phone, and there is also buttons and then sliders. It’s really these kinds of areas of touch that we will focus on. We have products across all three areas. I would say that from a standpoint of competitiveness of the company there is probably one other significant competitor, I would say, in the touch-screen area. And then, there is probably one recent competitor in the buttons and sliders area. From our standpoint, we are competing very effectively in all three areas. It's a very dynamic place, but there is only three people I'd say that are competing very effectively in the touch area today, including ourselves.

But today we're also wary about the way of high growth. We have design wins in the handset area with two of the top three cell phone manufacturers or handset suppliers. We also have design wins in areas that are also adopting touchscreen; such as printers and GPS, those types of applications, a lot of consumer handheld applications where touchscreen is becoming a major area as well and then expanding very considerably also in the buttons and sliders area.

The business for us grew very substantially in 2008 as compared to 2007. We expect this to be an area of very substantial growth, and despite the economic environment it will be an area of substantial growth in 2009 as well.

Craig Hettenbach - Goldman Sachs

Great. And if I can ask a follow-up related to the automotive market. Traditionally you haven’t had a big presence in microcontrollers. Can you just discuss the potential opportunity to leverage existing relationships within your RF and automotive business as it relates to penetrating deeper with microcontrollers?

Steve Laub

Yeah, though you're correct. Historically, the company hasn't had much of a presence in automotive with respect to the market controllers. For those people who are familiar with it, micros represent roughly full microcontrollers. Automotive customers represent roughly one third of the total market opportunity, and for us, it's really a complete renewal for us.

We have in the last two to three years invested quite a bit from an R&D side and we are now shipping a lot of automotive grade microcontroller products, so there is a lot of design activity that is occurring. In fact, in the automotive area, that area actually grew for us this past year, 2008 as compared to 2007, approximately a 60% growth for us. And as a percent of our total, it's right now at about; just under 5% of our total sales of micros goes into the automotive area, whereas again for the industry it is 33%. So it's a huge upside for us, and despite the fact that automotive right now is a very soft marketplace, but we look at this as one of the many areas where we can have a significant growth in the future.

Craig Hettenbach - Goldman Sachs

Okay. And last one if I could, as it relates to the $290 million you are planning internally. Any diversions between business segments in terms of, from what we've seen last quarter, or do you expect to see kind of similar trends in terms of relative performance between segments?

Steve Laub

I do expect, probably, somewhat similar to last quarter, I do expect the automotive business to be quite soft this quarter and so I expect that it will actually decline by more than the percentage reduction that the $290 million represents as compared to $334 million. I would also anticipate that the, ASIC business will actually probably decline more this quarter, than it did last quarter as well. Not surprisingly, I expect that the micro business will do better than the company will do overall and probably the micro business will decline this quarter probably something closer to the mid single-digits.

Craig Hettenbach - Goldman Sachs

Okay. Thanks so much.

Operator

Our next question is from the line of Steve Eliscu with UBS.

Steve Eliscu – UBS