Applied said that approximately 800 positions within its Silicon Valley operations and some 200 jobs in Austin, Tex. would be affected. The remaining positions are expected to be eliminated at other locations in the U.S. and worldwide.

The Santa Clara-based chip-equipment giant will record a restructuring charge in the first fiscal quarter, ending January 26, 2003. Employees will be notified beginning November 5.

The action is in response to the ongoing IC downturn, which has been especially painful for chip-equipment makers. Worldwide orders for semiconductor equipment are projected to plummet in the third and fourth quarters of 2002, with a possible recovery due in the second half of 2003, according to a recent report from SG Cowen Securities Corp. (see Oct. 14 story ).

At the same time, Applied itself has experienced some difficulties in several product areas, including the electronic-beam tool sector, where it continues to lose money, according to analysts. The company is also having a tough time in the low-k dielectric CVD, wafer-cleaning, and other markets, according to analysts.

"This was a painful but necessary decision to make in order to enable the company to align our operations with the current level of business and position for future growth," said James C. Morgan, chairman and CEO of Applied, in a statement.

"Despite our stringent cost-savings programs, the continuing uncertainty in the marketplace makes it necessary for us to take additional action to lower costs while at the same time preserving our investment in the technology and infrastructure that will enable Applied Materials to emerge from this downturn even stronger," he said.

Today's announcement had been rumored for weeks. Hit hard by the IC downturn, Applied had been gearing up to cut possibly between 1,500 to 3,000 employees, according to reports late last month. And since September of last year, Applied has announced 3,700 job cuts (see Heard on the Beat, Oct. 18 story ).

It also represents the company's fourth major layoff in the last year or so. In August of 2001, the company quietly implemented a small workforce reduction in an effort to cut costs. And a month later, in September of 2001, Applied announced that it would layoff 2,000 employees, or 10% or its workforce (see Sept. 20, 2001 story ).

Then, in December of last year, Applied reduced its global workforce by 10%, or 1,700 positions, in response to the continuing downturn in the semiconductor industry (see Dec. 12, 2001 story ).

Earlier this year, however, it appeared that the market was looking up for Applied and other chip-equipment makers. During a conference call last May, Morgan declared that the company was beginning to see the first phase of a recovery (see May 15 story ).

Applied reported that net sales revenue was up 26% sequentially to $1.46 billion in its third fiscal quarter ended July 28, 2002. This was down 7% from $1.58 billion for the third fiscal quarter of 2001. Income for the third fiscal quarter of 2002 was $115 million, more than doubling the $52 million recorded in the previous quarter and flat with the $115 million reported for the third fiscal quarter of 2001.

Since that time, however, Applied and other chip-equipment makers have seen their fortunes slide. Advantest, Axcelis, FEI, Lam, SemiTool, Teradyne, Ultratech, Veeco, and most other tool makers have separately announced layoffs in recent times.