Semiconductor Firm Planning to Cut 240 Jobs

Watkins-Johnson Co. said it will cut 20% of its 1,200-member work force, or 240 employees, which will result in a third-quarter loss, as weak orders for semiconductor manufacturing equipment eat into sales.

The maker of large equipment used in the manufacturing of computer chips said it expects to report a loss from operations of about $20 million, as well as $30 million in restructuring charges, write-down of some assets and payments for severance, for the three months ended Sept. 25.

That will result in a loss for the quarter of between $50 million and $55 million, the company said.

To cope with falling orders for its equipment, the Palo Alto-based company said it will stop development of the high-density plasma chemical-vapor-deposition systems, used in the intricate process of laying circuitry on a silicon chip. The patents and other intellectual property that have been achieved so far will be put up for sale.

“Semiconductor investment has declined, and the company believes decisive actions are required to bring its cost structure into alignment with the extremely low conditions of this cyclical market,” said W. Keith Kennedy, chief executive of Watkins-Johnson.