The Dutch group announced the job losses as part of a massive restructuring which means closing its San Antonio unit in Texas.

Philips said earlier this week that there was little to lift the global chip market out of its current slump and has already closed its semiconductor plant in Mexico, with the loss of 600 jobs.

The harsh reality met with analyst approval, and shares rose 7% on news of its further job cuts.

"Cost cutting is a very efficient way to raise your profit level," said Lex Werkheim, an asset manager at Eureffect brokerage in Amsterdam.

Out of synch

Philips has had a torrid year and been badly hit by the downturn in technology spending.

Demand for semi-conductors in particular - used in consumer electronics such as radios, cameras and mobile phones - has remained weak.

Last month, the group reported its latest record loss and said it saw little improvement in the state of the global economy in 2003.

It also warned that the continuing weakness of the US dollar might impact on sales and net profit.

Its bleak outlook, however, contrasts with that of rivals such as STMicroelectronics and Advanced Micro Devices.

STMicro, the word's fourth largest semiconductor maker, reported better than expected results in January and said it expected the market to recover this year.