NEC Corp, the third-biggest chipmaker, will cut 4,000 jobs worldwide and withdraw from memory-chip production within three years to reduce costs and boost profit.
The job losses will include about 2,200 contracted employees.
NEC will cut more than 600 of 1,600 workers at a chip plant in Scotland before March 2002.
Slumping demand for computers and consumer electronics has caught up with Japanese exporters like NEC, which had benefited from a weak yen to keep growing during a recession at home. NEC has struggled as the price of benchmark memory chips tumbled below the cost of production this year.
NEC's group profit fell 72 percent in the quarter ended in June, hurt by lower prices of microchips and PCs.
It is targeting net sales growth of 6 percent a year and an annual 6.4 percent increase in operating income. The company's shares rose 7 percent to ?1,669 on optimism it is taking bolder steps than many of its rivals.
NEC will cut chip spending by NEC Electron Devices by ?50 billion (US$401 million) this year to ?120 billion and freeze its planned ?20 billion investment to produce 8-inch wafers at its Shanghai chip plant.
The company will reduce or consolidate production at several semiconductor manufacturing plants, including almost halving monthly output at its UK chip plant.
NEC said in May it will stop making computer memory chips overseas, leaving a plant in Hiroshima, in western Japan, as the only one that focuses on faster chips.
Today NEC said it will continue to supply Elpida Memory Inc with chips on a contract-manufacturing basis at its Hiroshima plant, eventually transferring DRAM chip operations to Elpida and withdrawing from the business by about 2004, the company said.
The company will combine three chip assembling companies in Japan into NEC Semiconductors Kyushu Ltd in October and merge two other assembly plants into one location in the second half of this fiscal year.
Tokyo-based NEC is moving from low-margin DRAM production to concentrate on optical and microwave semiconductors, used in broadband Internet and mobile devices. It will establish a subsidiary in October, NEC Compound Device Ltd, that it plans to list on a stock exchange at an unspecified date.
Separately, the company is working with Thomson Multimedia on a venture to produce color plasma displays. The company is also looking for other possible partners to form alliances with in this area.
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