UPDATE 3-Applied Materials posts first qtrly loss since 2003

* Loss, excluding items, of $3 mln

* Cutting production in weak market

* Shares slide 3 percent (Adds job cuts, analyst's comments)

By Gabriel Madway and Janet Kornblum

SAN FRANCISCO, Feb 10 (Reuters) - Applied Materials Inc (AMAT.O), the world's No.1 maker of semiconductor production equipment, posted its first quarterly loss since 2003 and said it planned to cut back on production and jobs, sending its shares sliding 3 percent.

The company expects to save more than $400 million annually from a raft of cost-cutting measures intended to tide it through the chip industry's worst-ever downturn.

It now expects to cut more than 2,000 jobs, or 14 percent of its workforce, up slightly from the 1,800 previously announced.

Applied Materials is preparing for multi-week plant shutdowns in the fiscal second and third quarters, anticipating a halving of the market for crystalline silicon equipment.

It declined to provide specific forecasts.

"So how bad is it? Our leading semiconductor customers say that the fall-off in chip demand and pricing is the most severe they have ever experienced. Losses are mounting almost universally," Chief Executive Mike Splinter told analysts on a conference call.

Applied Materials reported a loss, excluding items such as equity-based compensation, gains on sales of facilities and inventory adjustments, of $3 million, or 0 cents per share, in the first fiscal quarter ended Jan. 25.

The company had warned previously that it could make its first quarterly loss since 2003. It posted first-quarter revenue of $1.33 billion, in line with its own forecast. [ID:nN02440593]

Applied Materials joins a spate of other chip gear makers, from rival Tokyo Electron (8035.T) to Novellus (NVLS.O), in the red as consumers and businesses buy fewer items that need chips. [ID:nN02440593]

Global semiconductor sales dived 22 percent in December, accelerating a months-long decline, according to the Semiconductor Industry Association.

Applied Materials has pushed aggressively into solar equipment to galvanize growth. But analysts say even investment in that sector was slowing with credit drying up.

Some analysts said, however, that that push would reap dividends for the firm in the longer term.