Under the terms, Atmel will pay approximately $88 million in cash at closing. Upon the satisfaction of certain contingencies over the next three years, certain Quantum shareholders may also receive up to an additional $42 million in cash and Atmel common stock, the ratio of which will be determined by Atmel at closing.

The acquisition of Quantum provides Atmel with a presence in the emerging touch sensing market. Privately-held Quantum claims to be the leading independent supplier of capacitive sensing solutions.

Capacitive sensing products are rapidly penetrating the overall touch sensing technology market, which is expected to grow from over $1 billion in 2007 to more than $3 billion in 2011, according to Atmel. Touch sensing in mobile phones alone is expected to grow from 50 million units in 2007 to 400 million units by 2011.

Quantum's touchpad navigation technologies support a wide range of markets and applications. Customers include General Electric, LG Electronics, Philips, Samsung, Siemens VDO Automotive, Sony, Toshiba, Whirlpool, and others.

"This transaction is an important step in our strategy to expand and strengthen our proprietary microcontroller product portfolio and accelerate Atmel's profitable growth," said Steve Laub, Atmel's president and chief executive of Atmel, in a statement.

''By integrating Quantum's capacitive sensing capabilities with Atmel's microcontroller technology, we will be able to offer best-in-class user interface solutions that we expect to differentiate Atmel and drive significant growth,'' he added.

The acquisition has been approved by Atmel's board and is expected to close in the first quarter of 2008, subject to customary closing conditions and regulatory approval. Following the completion of the transaction, Quantum will become part of Atmel's microcontroller business unit.