Zarlink Semiconductor is shedding two thirds of its test operations staff in Plymouth
Up to 40 jobs from the site's business unit, which includes test operations as well as design, will be cut. At present the unit employs 60 people.
The company claims that despite the layoffs the future of test operations at the site is secure.
A spokesman for Zarlink said: "This is just a downsizing. We have no plans to end test operations at Plymouth."
However, sources within the company claim that it intends to close down its testing facility at Plymouth, in order to shift resources to its design department.
Overall, the site has seen 200 redundancies so far this year. The latest cuts were announced to staff at the plant last week by Tony Gallagher, the company's operations director. The site currently employs 365 across fab, design and test operations.
Although the majority of the lay-offs are expected to be from test operations exact numbers will not be known until after a staff consultation process.
The redundancies are part of a global downsizing of 439 staff announced last month following disappointing first quarter results. Currently, the company employs 2000 worldwide.