UNITED STATES SECURITIES AND EXCHANGE COMMISSION

OR

Commission File Number 0-19032

ATMEL CORPORATION

2325 Orchard Parkway
San Jose, California 95131
(Address of principal executive offices)

(408) 441-0311
(Registrant’s telephone number)

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o

On April 28, 2005, the Registrant had 480,448,101 outstanding shares of Common Stock.

ATMEL CORPORATION

FORM 10-Q

QUARTER ENDED MARCH 31, 2005

INDEX

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

Atmel Corporation

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

1

Atmel Corporation

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

2

Atmel Corporation

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

3

Atmel Corporation

1. Summary of Significant Accounting Policies

     Basis of Presentation

     These unaudited interim condensed consolidated financial statements reflect all normal recurring adjustments which are, in the opinion of management, necessary to state fairly, in all material respects, the financial position of Atmel Corporation (“the Company” or Atmel) and its subsidiaries as of March 31, 2005 and the results of operations and the cash flows for the three-month periods ended March 31, 2005, and 2004. All material intercompany balances have been eliminated. Because all of the disclosures required by generally accepted accounting principles are not included, these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004. The December 31, 2004, year-end condensed balance sheet data was derived from the audited consolidated financial statements and does not include all of the disclosures required by generally accepted accounting principles. The condensed consolidated statements of operations for the periods presented are not necessarily indicative of results to be expected for any future period, nor for the entire year. Certain prior period amounts have been reclassified to conform to current presentations and such reclassifications did not have any effect on the prior periods’ net income.

     Inventories

     Inventories are stated at the lower of cost (determined on a first-in, first-out basis for raw materials and purchased parts; and an average-cost basis for work in progress) or market, and are comprised of the following:

     The Company’s policy is to write down its raw materials, work in progress and finished goods to the lower of cost or market at the close of a period. The Company’s inventory represents high technology integrated circuits that are subject to rapid technological obsolescence and are sold in a highly competitive industry. If actual product demand or selling prices are less favorable than the Company’s estimate, the Company may be required to take additional inventory write-downs. Alternatively, if the Company sells more inventory or achieves better pricing than the Company’s forecast, future margins may be higher.

     Grant Recognition

     Grants from government organizations are amortized as a reduction of expenses over the period the related obligations are fulfilled. During the first quarter of 2005, the Company entered

4

into new grant agreements with several French government agencies. Recognition of future benefits will depend on the Company’s achievement of certain investment and employment goals. During the three-month period ended March 31, 2005 and 2004, the Company recognized $10,180 and $7,044 of grant benefits.

     Stock-Based Compensation

Atmel has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123 (“SFAS No.123”), Accounting for Stock Based Compensation amended by SFAS No. 148. Accordingly, no compensation cost has been recognized for the 1986 Incentive Stock Option Plan, the 1996 Stock Plan or for grants made under the 1991 Employee Stock Purchase Plan (“ESPP”). If the compensation cost for the 1986 Plan, the 1996 Plan and the ESPP had been determined based on the fair value at the grant date consistent with the provisions of SFAS No.123, Atmel’s net income (loss) per share for the three-month periods ended March 31, 2005, and March 31, 2004 would have been adjusted to the pro forma amounts indicated below:

     The fair value of each option grant for both the 1986 Plan and the 1996 Plan is estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

     The fair value of each purchase under the ESPP is estimated on the date at the beginning of the offering period using the Black-Scholes option-pricing model with substantially the same assumptions as the option plans but with expected lives of 0.5 years. The weighted average fair

5

values of ESPP purchases during the three-month periods ended March 31, 2005 and 2004, were $1.01 and $1.44, respectively.

     The effects of applying SFAS No.123 on the pro forma disclosures for the three-month periods ended March 31, 2005 and 2004, are not likely to be representative of the effects on pro forma disclosures in future periods.

     Recent Accounting Pronouncements:

     In December 2004, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 123 (Revised 2004), “Share Based Payment” (“SFAS No. 123R”). SFAS No. 123R is a revision of SFAS No. 123.This Statement supersedes APB No. 25, which is the basis for our current policy on accounting for stock-based compensation described above. SFAS No. 123R will require companies to recognize as an expense in the Statement of Operations the grant-date fair value of stock options and other equity-based compensation issued to employees. Pro-forma disclosures about the fair value method and the impact on net loss and net loss per share appear above. Under the methods of adoption allowed by the standard, awards that are granted, modified, or settled after the date of adoption should be measured and accounted for in accordance with SFAS No. 123R. The fair value of unvested equity-classified awards that were granted prior to the effective date should continue to be accounted for in accordance with SFAS No. 123 except that amounts must be recognized in the Statement of Operations. Previously reported amounts may be restated to reflect the SFAS No. 123R amounts in the Statement of Operations.

     In April, 2005, the SEC announced that registrants previously required to adopt SFAS No. 123R’s provisions on share-based payment at the beginning of the first interim period after June 15, 2005 may now adopt the provisions at the beginning of their first annual period beginning after June 15, 2005.

     The Company is evaluating the requirements of SFAS No. 123R and we expect that the adoption of SFAS No. 123R will have a material impact on our consolidated results of operations and net income (loss) per share. The Company has not yet determined the method of adoption or the effect of adopting SFAS No. 123R, and has not determined whether the adoption will result in amounts that are similar to the current pro forma disclosures under SFAS No. 123.

     In March 2005, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 107, (“SAB No. 107”). The interpretations in SAB No. 107 express views of the SEC staff regarding SFAS No. 123R and provide the SEC staff’s views regarding the valuation of share-based payment arrangements for public companies. The Company will consider the guidance in SAB No. 107 when it adopts SFAS No. 123R in the three-month period ending March 31, 2006.

     In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets – an amendment of Accounting Principles Board Opinion No. 29 (“APB No. 29”). The guidance in APB No. 29, “Accounting for Nonmonetary Transactions,” is based on the principle that gains or losses on exchanges of nonmonetary assets may be recognized based on the differences in the fair values of the assets exchanged. The guidance in that Opinion, however, included certain exceptions to that principle which allowed the asset received to be recognized at the book value of the asset surrendered. This Statement amends APB No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for

6

“exchanges of nonmonetary assets that do not have commercial substance”. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. The provisions of this Statement should be applied prospectively, and are effective for the Company for nonmonetary asset exchanges occurring from the third quarter of 2005. Earlier application is permitted for nonmonetary asset exchanges occurring in the first quarter of 2005. The adoption of this statement is not expected to have a material impact on the Company’s Consolidated Financial Statements.

     In November 2004, the FASB issued SFAS No. 151, “Inventory Costs – an amendment of Accounting Research Bulletin (“ARB”) No. 43, Chapter 4” (“ARB No. 43, Chapter 4”). This statement amends the guidance in ARB No. 43, Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that “. . . under some circumstances, items such as idle facility expense, excessive spoilage, double freight, and rehandling costs may be so abnormal as to require treatment as current period charges. . . .” This Statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal.” In addition, this Statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. This Statement is effective for the Company for inventory costs incurred beginning in 2006. Earlier application is permitted. The provisions of this Statement should be applied prospectively. The adoption of this statement is not expected to have a material impact on the Company’s Consolidated Financial Statements.

     At its November 2003 meeting, the EITF reached a consensus on disclosure guidance previously discussed under EITF 03-01, “The Meaning of Other Than Temporary Impairment and its Application to Certain Investments” (“EITF 03-01”). The consensus clarifies the meaning of other-than-temporary impairment and its application to investments classified as either available-for-sale or held-to-maturity under SFAS No. 115 and investments accounted for under the cost method. The consensus provided for disclosure of amounts of impairment of investments in securities not yet recognized in income effective for fiscal years ending after December 15, 2003. The Company adopted the disclosure requirements during its quarter ended September 30, 2004. At its March 2004 meeting, the EITF reached a consensus on recognition and measurement guidance previously discussed under EITF 03-01. The consensus clarifies the meaning of other-than-temporary impairment and its application to investments classified as either available-for-sale or held-to-maturity under SFAS No. 115 and investments accounted for under the cost method. The recognition and measurement guidance for which the consensus was reached in the March 2004 meeting is to be applied to other-than-temporary impairment evaluations in reporting periods beginning after June 15, 2004. In September 2004, the FASB issued FASB Staff Position, 03-01-1, which delays the effective date of the recognition and measurement guidance. The Company does not believe that this consensus on the recognition and measurement guidance will have a significant impact on its Consolidated Financial Statements.

2. Short-Term Investments

     Short-term investments as of March 31, 2005 and December 31, 2004 are primarily comprised of United States of America (“U.S.”) and foreign corporate debt securities, U.S. government and municipal agency debt securities, commercial paper, and guaranteed variable annuities.

7

     All marketable securities are deemed by management to be available for sale and are reported at fair value with net unrealized gains or losses reported within stockholders’ equity. Realized gains are recorded based on the specific identification method. For the three-month periods ended March 31, 2005 and 2004, there were no net realized gains on short-term investments. The carrying amount of the Company’s investments is shown in the table below:

     Contractual maturities of available-for-sale debt securities as of March 31, 2005, were as follows:

     The following table shows the gross unrealized losses and fair value of the Company’s investments that have been in a continuous unrealized loss position for less than and greater than 12 months, aggregated by investment category as of March 31, 2005:

     The Company considers the unrealized losses in the table above to not be “other than temporary” due primarily to their nature, quality and short term holding.

8

3. Intangible Assets

     Intangible assets as of March 31, 2005, are included in Intangibles and Other Assets in the condensed consolidated balance sheets and consisted of the following:

     Intangible assets as of December 31, 2004, consisted of the following:

     Intangible amortization expense for the three-month periods ended March 31, 2005, and March 31, 2004, totaled $2,667 and $3,229, respectively. The following table presents the estimated future amortization of net intangible assets:

9

4. Borrowing Arrangements

     Information with respect to Atmel’s debt and capital lease obligations is shown in the following table:

     Maturities of the debt and capital lease obligations are as follows: