The fab's utilization rates had been running at 60 percent, or about 20,000 wafers per month, and the latest cut drops DRAM production a further 30 percent, according to a Hitachi spokesman in Tokyo. The job cuts reduce the number of employees to 550. The spokesman refused to comment on the potential charges or savings of the move.

HNS was established in 1996 as a joint venture between Hitachi and Nippon Steel Corp. as a major DRAM production center. Each company took a 35 percent stake, and local venture capital raiser EDB Investments Pte. Ltd also signed on for 30 percent.

The fab will now concentrate on producing AND-type flash memory on the company's 0.18-micron process for Hitachi's range of media cards and SDRAM. The volume for both memory types is as yet undecided, the spokesman said.

"We have just started prototype flash production and will start SRAM pilot line production in December, with volume production for both starting around next April," the spokesman said.

The cut represents the second major set of job losses at the subsidiary, which is Hitachi's only major foreign DRAM fab. In October, the company terminated 300 temporary workers as part of a strategic plan aimed at accelerating Hitachi's withdrawal from the commodity DRAM market and into potentially more profitable memory and logic products.

According to the strategic plan, Hitachi will focus on production ramps of four types of products; establish a new multipurpose semiconductor company; reduce and consolidate both back-end and front-end manufacturing; and cut 3,100 jobs by next March in a bid to reduce fixed costs 25 percent in 2002.

In terms of products, the company hopes to ramp its new F-ZTAT microcontrollers with built-in flash for optical disks, PC peripherals and network systems, its SuperH Mobile Application Processor line for digital consumer products and lines of stacked-CSP and MultiMediaCards. HNS will play a major role in these ramps, as will the company's N2 line at its Naka plant in Hitachinaka city, north of Tokyo.

The company plans to consolidate its Multi-Purpose Semiconductor Group with its Hitachi Tohbu Semiconductor Ltd. subsidiary into one company, to be established in October 2002. The new company will focus on producing analog ICs, standard linear, high-power amplifiers, standard logic and transistors. The merged unit will aim for yearly sales of $1.6 billion by March 2005 compared with a yearly sales total of $1.3 billion ending this March, according to the company.

For front-end production, the company will reduce the number of lines from 19 to 12 by August 2002 and back-end production bases from 13 to eight by September 2002.

HNS' further reduction in DRAM output should be seen as part of Hitachi's larger shift away from commodity DRAM production, but it was also a reminder of how appalling this year's DRAM market is, said Soo Kyoum Kim, memory analyst and senior manager at International Data Corp. (Seoul, South Korea).

In its original plan the company had stated that it would leave the door open to reducing DRAM production at HNS "to match demand." Hitachi has long planned to switch all its DRAM production to Elpida Memory Inc., its joint venture with NEC Corp., but had expected to wind down production at its Naka plant first, Kim said.

"They've had more trouble than they expected," he said.

"After a brief [spot market] price rise, actually the market has become very, very weak again after Thanksgiving, and synchronous [DRAM] is falling again too. This move shows they no longer have enough money to sustain foreign DRAM production," Kim said.