updated 3/11/2009 8:57:52 AM ET 2009-03-11T12:57:52

Faced with a steep decline in sales, chip maker National Semiconductor Corp. said Wednesday it will eliminate more than one-quarter of its work force, eliminating 1,725 jobs.

The company said it will immediately begin trimming 850 positions worldwide in its product lines, marketing, manufacturing and support businesses. An additional 875 jobs will be lost with the shuttering of facilities in Suzhou, China and Arlington, Texas over the next few quarters. National has about 6,500 employees.

The Santa Clara, Calif., company said the layoffs will cost $160 million to $180 million in severance and other charges, $130 million to $145 million of which will likely be recorded in this fiscal quarter.

The cuts came as National recorded a 71 percent decline in its third-quarter earnings, posting a profit of $21.1 million, or 9 cents per share, compared with $72.9 million, or 29 cents per share, a year earlier.

Sales fell more than one-third to $292.4 million from $453.4 million.

Analysts polled by Thomson Reuters expected a loss of 5 cents per share on sales of $295.6 million.

"The worldwide recession has impacted National's business as demand has fallen considerably," Chief Executive Brian L. Halla said in a statement.

The company also declared a cash dividend of 8 cents per share to be paid on April 14 to share holders on record as of March 23.

National said it expects another 5 percent to 10 percent sequential decline in sales, which would put its fourth-quarter revenue between $263.2 million and $277.8 million. Analysts expect revenue of $292.6 million.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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