Texas Instruments (TI), the maker of chips for consumer electronics and industry equipment, said it was shutting down two factories in Texas and Japan, which will see slashing of headcount by 1,000.
The company saw orders falling in December, which did increase in January, but dropped back around the Chinese New Year.
The closure of two factories would cost the company $215m in the course of next 18 months, with the layoffs estimated to be at about 3% of the total workforce.
The plant in Japan started production 32 years ago.
Since mid-2011, players in the chip industry are being conservative about their approach to production and stock levels, seeing the prospects of an economy in recession.
TI, which reported a $942m profit Q4 last year, said the same stood at $298m this time around, while revenue fell to $3.42bn from $3.53bn.
The figures meet the expectations of analysts, but bring forth a tepid forecast moving forward in 2012.
TI CFO Kevin March said the company saw a broad resumption of demand with customers not stocking enough chips.
He also mentioned there was a sharp fall in demand for baseband chips, whose demand would drop to $75m.
