Potential deals just keep on unraveling in the pressure cooker of the global financial crisis.

ON Semiconductor and Microchip Technology withdrew their $2.3-billion joint proposal to acquire Atmel Corp., a day after a merger once valued at $10-billion was terminated by mining companies Cliffs Natural Resources Inc. and Alpha Natural Resources Inc.

Keith Jackson, president and CEO of ON Semiconductor, said the two companies dropped their all-cash offer “due to the unforeseen deterioration in the semiconductor market since we announced our proposal as well as the unprecedented weakness in the financial markets.” Microchip made it appear that it was still interested in pursuing a transaction, but pulled out when ON Semiconductor changed its mind.

“We are disappointed that difficult semiconductor industry and financial market conditions have resulted in ON Semiconductor withdrawing from our joint proposal to acquire Atmel,” said Steve Sanghi, Microchip’s president, CEO, and chairman, in their joint announcement. “As a result of ON Semiconductor’s withdrawal, Microchip must also withdraw its $5 per share offer for Atmel. However, Microchip intends to evaluate its potential alternatives for pursuing a transaction without ON Semiconductor.”

Jackson said that he still believes Atmel’s Nonvolatile Memory and RF and Automotive businesses to be attractive assets for acquisition.

In a separate announcement, Atmel said its board and management remained focused on execute a new plan for moving forward. “We are making significant progress, as evidenced by Atmel’s outstanding third quarter results, which included market share gains and the highest gross margins in seven years,” it said in a statement. “The decision by Microchip and ON to withdraw their unsolicited, unfinanced proposal underscores our board’s determination that the proposal was highly conditional and subject to significant execution risk.”

On Oct. 29, Atmel’s board rejected the joint proposal as inadequate and not in the stockholders’ interests. Microchip and ON Semiconductor then said they are disappointed with Atmel’s rejection, and last week the two reiterated their commitment to do the deal. “Considering the significant value our proposal would create for Atmel’s shareholders, we were surprised that Atmel’s board rejected our offer without engaging in any discussions with us,” Sanghi and Jackson said at the time.

In the case of the Cliffs Natural Resources and Alpha Natural Resources breakup on Monday, both boards agreed to terminate the deal, in which Cliffs would have acquired Alpha. The companies said each board’s decision was made after considering the current macroeconomic environment, uncertainty in the steel industry, shareholder dynamics, and risks and costs of potential litigation. Considering these issues, each board determined that settlement of the litigation and termination of the merger agreement were in shareholders’ best interests of its equity holders.

Alpha and Cliffs added that, going forward, the companies plan to work together to find ways to realize synergies in their respective coal operations.

Under the terms of the settlement, the merger agreement will be terminated, Cliffs will pay Alpha $70 million, and Alpha will dismiss the Delaware litigation with prejudice, with the parties releasing each other from obligations and claims arising from the merger agreement.

While worth $10 billion when it was announced in July, the deal this week was valued at closer to $2.7 billion.