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Flash memory maker Spansion is cutting approximately 3,000 jobs, or 35 per cent of its workforce. Most of the cuts will come at the company's manufacturing sites, as it works to restructure itself amidst a sinking economy.

"The global recession is forcing us to make this very difficult decision in order to bring our costs in line with the current expectations for significantly reduced revenues," reads a canned statement from Spansion president and CEO John Kispert.

Spansion says the cuts will cost the company roughly $25 million on its balance sheet for the first half of the year. But it expects to save about $225 million by year end.

A joint venture of AMD and Fujitsu, Spansion makes so-called NOR flash memory, a less-popular competitor to NAND flash. The company is the third largest flash manufacturer, behind Samsung and Toshiba

In January, Spansion told the world it was discussing restructuring options with shareholders - as well as a possible sale. Then, earlier this month, the company's Japanese unit filed for bankruptcy protection with $810 million in liabilities.

A source tells The Reg that the entire production staff at the company's R&D lab in Sunnyvale, CA was laid off. Only a handful of top engineers have been retained, the source says. Presumably, these engineers will come in handy as the company attempts to sell itself.

Today's cuts came just hours after Taiwanese chip testing and assembly outfit ChipMOS told the world it had ended its services contract with Spansion after the company failed to pay the final $29 million of a $73 million debt. ®

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