Applied, the world's largest fab-tool supplier, expects to record charges of approximately $20 million related to the plan. The majority of the charges are being recorded in the first quarter of fiscal 2008, and to complete the plan by the fourth quarter of fiscal 2008.

The plan is expected to result in annualized savings of about $150 million from fiscal 2007 spending levels.

Rumors have been running rampant that Applied would implement a layoff amid a slowdown in the fab-tool market. Chip forecasts are up, but capital spending is projected to fall like a rock in 2008.

"To better serve our customers, last summer we reorganized our semiconductor equipment business into a single Silicon Systems Group, and we have achieved synergies across this organization as a result," Mike Splinter, president and CEO, said in a statement.

"We are focused on improving operational efficiencies and the cost structure of our businesses, as well as enhancing our ability to pursue growth opportunities."

Last year, in a move to cut costs, Applied appointed Tom St. Dennis, senior vice president, as general manager of the newly created Silicon Systems Group. St. Dennis assumed responsibility for a consolidated product business group that encompasses Applied Materials' entire portfolio of semiconductor manufacturing systems.

For some time, Applied has been cutting costs. At the same time, the company has been making a strong push into the solar equipment markets. In fact, the company has acquired several companies in the arena.

So far, solar is growing at Applied but it is also losing money for the company. At the same time, Applied has failed to make headways in several traditional fab-tool markets, such as copper plating, wafer cleaning and others.

Some speculate that Applied has not made a dent in the high-k dielectric market for gate-stack applications, despite rolling out a new machine last year. ASMI, TEL and others have taken that business away from Applied.

And last year, Applied Materials announced its intention to cease future development of ion implanter products and will close its operations in the arena -- a move that impacts 270 employees.

In its most recent quarter, Applied Materials posted mixed results amid a lull in the fab-tool sector. Fourth quarter net sales were $2.37 billion, down from $2.52 billion for the fourth quarter of fiscal 2006, and down from $2.56 billion for the third quarter of fiscal 2007.

Net income was $422 million, or $0.30 per share, compared to net income of $449 million, or $0.30 per share, for the fourth quarter of fiscal 2006, and down from $474 million, or $0.34 per share, for the third quarter of fiscal 2007.

For the current quarter, Applied is projected to earn $0.20 per share on sales of $2.01 billion.