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Electronic component maker Atmel has confirmed that it is selling its Tyneside factory, with the loss of more than 600 jobs expected as a result.

The American-based firm has agreed to sell the microchip plant to a business park developer, while equipment at the factory is to be sold to a Taiwan company in a separate deal.

News that the factory is to close will come as a major blow to North Tyneside, with Atmel one of the region's largest employers.

However the company warned last year that the factory was likely to close as a result of restructuring plans.

Atmel's North Tyneside managing director Craig McInnes said the decision to close the factory had been a "difficult" one to make.

"Atmel has many hard-working, dedicated employees at the North Tyneside facility who serve our customers and our company admirably," he said, in comments reported by the BBC.

"We are committed to treating employees with respect and helping ease the transition for employees at the North Tyneside facility as production is concluded," Mr McInnes added.

Responding to news of the planned factory closure the north-east's regional development agency stressed that it would be seeking assurances from Atmel over the new owners' intentions for the site.

Alan Clarke, One NorthEast chief executive, said the decision was "very disappointing" for the region.

"We have met with Atmel US senior executives and potential purchasers over many months to reiterate One NorthEast's support for the business going forward," he said.

"But ultimately, the sale of Atmel was a commercial decision taken by the company," Mr Clarke added.

Production at Atmel's Tyneside factory is set to continue until the first quarter of 2008, the company has said.