Chip makers are shutting down less-productive factories, delaying investment projects and even cutting staff in a sign that the global economic slowdown and the credit crunch are taking a hefty toll on demand and hurting their operations. The coming few months could be critical for several memory-chip makers in Asia, Europe and the US as they continue to grapple with weak demand and a severe cash crunch amid plunging chip prices, which remain well below their manufacturing costs.

Infineon said on Saturday that Fairchild Semiconductor's patent lawsuit against the German chip maker had been filed in response to a similar case brought by Infineon against its US rival. The two companies are in a legal tussle over so called power chips that regulate electricity supply in computers, sold by Infineon under its CoolMOS and OptiMOS as well as Infineon IGBT and CanPak brands.

German micro-chip maker Infineon (IFXGn.DE: Quote, Profile, Research, Stock Buzz) plans to step up its recent cost cutting programme and is in talks with shop stewards about shortened working weeks, it said on Saturday. A spokesman for the company confirmed a pre-release of a report in Sunday paper Welt am Sonntag that Infineon was to slash costs beyond the 200 million euro ($258.8 million) programme already announced.

Fab capacity utilisation in Q3 was high for advanced processes and 300mm fabs but overall showed a decline, according to the latest Semiconductor Industry Capacity Statistics (SICAS) report, with the foundry industry experiencing sharp declines in capacity, actual wafer starts and capacity utilisation.

Investors are also expecting a decline in mobile phone demand in 2009. Dow component Intel Corp slid 1.3 percent to $13.80 while Applied Material was off 0.9 percent to $9.64 and National Semiconductor slid 1.8 percent to $11.05.

STMicroelectronics NV, Europe's largest semiconductor maker, said fourth-quarter revenue and gross margin will miss forecasts after a slowdown in demand from the wireless, automotive and computer peripherals industries.

The European Commission on Thursday officially approved an Ericsson-STMicroelectronics joint venture to provide wireless platforms for handsets and semiconductors for mobile communications.

The world's top two contract chip makers, TSMC and UMC, are preparing to cut costs by up to 20 percent as their industry heads into a sharp downturn, industry sources said on Friday. Taking about a two-thirds share of the global foundry market together, the two Taiwan firms are facing a global economic slowdown that has forced consumers to cut spending on new PCs, cellphones and flat-screen TVs that require microchips.

AMD's manufacturing arm which is heading for a spin-off to form a foundry services provider, regards the current downturn as a good anti-cyclical investment opportunity. Nevertheless, the company is aware of the challenges they are approaching, said two top managers of the company. While the Foundry Company will maintain and expand its production capacity in Dresden and later plans to build a new fab in upstate New York, the headquarters will be placed in the Silicon Valley.

The closure of Suvarnabhumi Airport may be the last straw for business sector and foreign investors, who say they will no longer be reluctant to shift investments to other countries. It is said to be damaging the country's image and investment in in tourism and logistics.

The deadly attacks Wednesday in Mumbai, in addition to the human toll, have damaged for now the city's lofty ambitions of becoming an international finance capital rivaling Hong Kong and Singapore.

"Certainly we wouldn't abandon this industry" in Taiwan, which accounts for about 30 percent of global supplies, Siew said yesterday at an American Chamber of Commerce meeting in Taipei, when asked what the government would do to support the dynamic random access memory (DRAM) market. "We should take this opportunity to consolidate the industry to become more competitive," he said.

"As for next year, it is possible that the market could post a single-digit or even negative growth," a Samsung spokesman said.

The decision by Samsung to abandon its six-inch, or 150-millimeter, wafer fabrication lines and focus production on its eight-inch and 12-inch wafer lines reflects a desperate attempt to improve the efficiency of its product lineup.

People looked it up so often on Merriam-Webster's online dictionary that the Springfield-based publisher says "bailout" was an easy choice for its annual Word of the Year honor.

The Nikkei business daily said Elpida, the world's No. 3 maker of dynamic random access memory, will need to spend about 4 billion yen ($42 million) to raise its stake in Rexchip Electronics.

Japanese electronics conglomerate Toshiba is considering delaying construction of two new domestic chip plants amid slowing demand and falling prices, Kyodo news agency reported on Wednesday.

Semiconductor equipment companies are using memory semiconductor recession as opportunity to grow further. World economic downturn has hit both local and foreign equipment makers, so local makers believe that if the memory semiconductor market is recovered, only companies that have done their best to cut cost will take the benefit of semiconductor market recovery.

"There is no denying that fundamental weakness in demand is turning from bad to worse," Irvin Seah, an economist at DBS Group Holdings Ltd. in Singapore, said in a report today. The outlook for manufacturers in the coming months "will not be a pretty picture."