News : Electronics industry axes jobs, sees bleak Christmas

By Nathan Layne and Tarmo Virki

TOKYO/HELSINKI (Reuters) - Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz) axed thousands of jobs on Tuesday and bearish comments from Samsung (005930.KS: Quote, Profile, Research, Stock Buzz) and Texas Instruments (TXN.N: Quote, Profile, Research, Stock Buzz) added to the gloom in the technology sector as consumers shun the latest gadgets.

Demand for consumer electronics has slumped in the run-up to Christmas as the financial crisis has grown into a broad recession that has already engulfed the U.S., parts of Europe and is dampening demand in emerging markets.

"Consumers have essentially stopped buying," said Brian Halla, Chief Executive of chipmaker National Semiconductor. "For the first time in a long time, you think before you buy the new gadget or choose to upgrade your phone."

Japan's Sony said it would slash 8,000 jobs, about 4 percent of its workforce, scale back investments and pull out of businesses as it aims to cut $1.1 billion in costs out of its ailing electronics operations.

The cuts -- the biggest announced by an Asian firm so far in the financial crisis -- and other restructuring steps underscore challenges facing Sony, which has fallen well behind Apple Inc's (AAPL.O: Quote, Profile, Research, Stock Buzz) iPod in portable music and is struggling to make money on flat panel TVs.

Korean electronics giant Samsung Electronics Co Ltd said late on Monday it was cutting its targets for sales, capital expenditures and profit, reflecting an increasingly tough worldwide economy.

The world's top maker of memory chips and liquid crystal displays (LCDs) is also facing a lengthy downturn in the once-reliable memory market and a rapid margin deterioration in the flat-screen TV sector.

Chu Woo-sik, head of investor relations, said at an investor conference that capital expenditures would drop 2-3 trillion won next year.

"At a time when people are worried about losing their jobs and paying their mortgages it is not surprising that the consumer electronics industry is being hit," said Gartner analyst Carolina Milanesi.

"In the past, when things started to improve, it has also been one of the first industries to bounce back," she said.

Overnight, chip makers Texas Instruments Inc (TXN.N: Quote, Profile, Research, Stock Buzz) and smaller rival National Semiconductor Corp (NSM.N: Quote, Profile, Research, Stock Buzz) slashed current-quarter revenue forecasts to far below Wall Street expectations as demand for mobile phone and analog chips came to a virtual standstill.

Also smaller chipmakers Broadcom Corp (BRCM.O: Quote, Profile, Research, Stock Buzz) and Altera Corp (ALTR.O: Quote, Profile, Research, Stock Buzz) warned on Monday of weaker-than-expected demand.

"Conditions (are) likely to get worse before they get better," TI's head of investor relations Ron Slaymaker told analysts on a conference call.

The DJ Stoxx European technology index was up 1.9 percent by 1117 GMT, outperforming a 1.2 percent gain in the broader STOXX 600 . Infineon (IFXGn.DE: Quote, Profile, Research, Stock Buzz) shares fell 5 percent while Ericsson (ERICb.ST: Quote, Profile, Research, Stock Buzz) was up 0.8 percent.

(Additional reporting by David Lawsky and Jennifer Martinez in San Francisco, with Sinead Carew in New York; editing by Elaine Hardcastle)