Canon to cut 700 jobs at chip gear operations

TOKYO, June 30 (Reuters) - Japan's Canon Inc (7751.T) said it would cut about 700 jobs at its chip equipment operations, underscoring a bleak outlook for the sector as the global economic crisis hits demand and forces chip makers to curb capital spending.

The world's third-largest maker of chip steppers behind ASML (ASML.AS) and Nikon Corp (7731.T) says most workers to be affected are in Japan and that the workers will be transferred to other sections within Canon.

Steppers are multi-million dollar machines used to etch circuitry onto semiconductors and LCD panels.

Canon spokesman Makoto Sugimoto declined to say how many staff it has in its chip stepper operations but the Nikkei business daily reported that the 700 jobs were roughly equivalent to 30 percent.

Canon does not expect its optical products division, which offers microchip and LCD steppers, to turn profitable until 2012.

The company, which is also the world's No.1 digital camera maker and competes with Xerox Corp (XRX.N) and Ricoh Co Ltd (7752.T) in copiers and printers, expects the unit to post an operating loss of 27.4 billion yen ($285 million) in 2009.

Shares in Canon were flat at 3,160 yen, underperforming the Nikkei average .N225, which gained 2 percent. (Reporting by Kiyoshi Takenaka; Editing by Edwina Gibbs)