STMicroelectronics is to rid itself of 2,300 European workers by the middle of next year, part of the chip company's already announced plan to cut 3,000 jobs outside of Asia.

The firm made the announcement yesterday during a meeting of its European Work Council. It didn't say where the remaining 700 jobs would be lost, but the US is the most likely location.

The cuts follow STMicro's poor Q1 FY2005 figures. For the three months to 2 April 2005, the company posted an operating loss of $68m and a net loss of $31m (three cents a share) on revenues of $2.08bn, down 10.5 per cent sequentially but 2.6 per cent up on the year-ago quarter.

STMicro anticipates additional savings of $90m per year as a result of the overall job cuts, which will cost the company between $100m and $130m to implement, it said.

Some of the cuts will come through the non-renewal of temporary positions, it said, and through voluntary redundancy packages, early retirement and part-time working schemes.

STMicro said it plans to reorganise its European activities by globalising its wafer testing procedures and support functions, by rationalising its non-manufacturing activities and by "disengaging" from certain work. It must now submit its plans to labour representatives with whom it must consult, according to European law. ®

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