Chipmaker General Semiconductor is to close its factory in Macroom, 25 miles from Ireland's second city Cork, by the end of the year with the loss of 670 jobs.
The closure marks another blow against the Celtic tiger economy, named after the booming technology and financial services sectors in recent years.
General's news follows PC maker Gateway's decision last week to pull out of Europe with the loss of 850 jobs in Dublin.
The chip maker is in the process of being bought by electronic components maker Vishay Intertechology in an all-stock deal valued at $538.9m.
It is axing 5700 jobs globally because of the slowdown in the market. Recent reports show that the semiconductor industry will see sales decline by 26 per cent in 2001 compared to 2000.
Separately, BT has scaled back plans to create a new call centre in Londonderry, Northern Ireland. The Queen's Call Centre project was expected to create 650 jobs.
While some 250 staff have so far been hired a planned further expansion that would have created another 400 jobs has been scrapped. The decision was blamed on the global slump effecting the IT and telecoms industry.
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