BBC Monday, 27 August, 2001, 10:12 GMT 11:12 UK Toshiba cuts 18,800 jobs The worldwide IT slump has hit Toshiba

Electronics giant Toshiba, hit by the collapse in computer chip prices, is to axe 18,800 jobs.

The firm, Japan's largest chipmaker, has confirmed media reports that it is to cut its global workforce by 10%.

Toshiba is also exploring a tie-up with European rival Infineon, which has reported a slump of almost two thirds in profits at its memory chip division.

The moves provide further evidence of the difficulties besetting Japan's tech sector, still reeling from the announcement a week ago that Fujitsu was cutting 16,400 posts.

Hitachi, Japan's largest electronics manufacturer, is also considering cutting 20,000 posts, a report by a Japanese newspaper said on Sunday.

Hitachi on Monday confirmed it was to cut 800 jobs by March at its electronic materials and household chemicals unit, Hitachi Chemical, with news of more widespread cuts not expected for a fortnight.

'Dramatic slowdown'

Toshiba blamed the job losses on the deteriorating business climate, which has affected firms in technology sectors particularly badly.

"The dramatic economic slowdown that began in the US at the end of 2000 is becoming a global phenomenon that has undermined worldwide demand for IT," the firm said in a statement.

The majority of jobs culled - about 17,000 - will go from operations in Japan, where a further 10,000 staff will be encouraged to shift posts within the group.

It is as yet unclear where Toshiba, which has offices throughout the world, will make the rest of the cuts.

In the UK alone, Toshiba has operations in Bristol, Cambridge, Crawley, Durham, London and Plymouth, and at various locations in Surrey.

The firm also revealed that it expects to make a pre-tax loss of 190bn yen ($1.6bn) in the year to March, compared with a previous forecast of a 110bn yen ($900m) pre-tax profit.

Sales, which the firm had estimated at 6,440bn yen over the year, are now expected to come in at 5,750bn yen.

Infineon talks

Monday's statement also revealed that Toshiba was looking to combine chip operations with those of an unidentified partner.

German-based Infineon, Europe's second biggest chipmaker, later confirmed it had begun discussions with Toshiba "for a potential partnership in the memory sector".

The talks were at "a preliminary stage", an Infineon spokesperson said.

Infineon has suffered severely from a crisis in the chip market, hit by plummeting sales of PCs and other computer equipment.

The firm last month revealed that sales of memory chips in the April-to-June quarter were 62% below those a year before.

Chip prices had fallen by an average of 30% since the beginning of the year, Infineon said, warning that it would run at a loss in the year to September.

Two days later the firm announced 5,000 job cuts in an effort to save 1bn euros (£616m; $880m) in costs.

Hitachi statement

The losses at Hitachi Chemical were revealed in a statement announcing that investment by the parent company in the division would be cut to 26bn yen ($216.5m) this year, from the 31.8bn yen originally planned.

Details of any group-wide redundancies are expected to be released with a profits forecast set for publication early in September.

News of the shake-ups helped Toshiba stock end 5.6% up at 604 yen in Tokyo on Monday, with Hitachi shares rising 2.6% to 1,014 yen.

Toshiba shares last week hit 558 yen, their lowest level for almost three years.

In Frankfurt, Infineon shares stood 3.4% higher at 27.69 euros in morning trade.

-- Anonymous, August 27, 2001