Seagate has been in the area for 10 years

Staff were given the news at a meeting in the Limavady plant on Monday.

Seagate, which has received �12m from Invest Northern Ireland and its predecessor IDB since 2001, will close in the second half of next year.

Plant manager William O'Kane said the news was sad but inevitable. "This is no way due to the employees," he said.

"We have a fantastically skilled and fantastically motivated and fantastically inventive workforce which would be an asset to any future employers.

"However, even with those assets and the improvements we have made in productivity and technology, we have had to bow to the inevitable cost pressures that exist in the Far East."

The American company has had a base in Limavady for the last decade.

However, it has a plant in Malaysia which is due to start operations in the new year.

It will make the computer components currently being made in Limavady.

Wage costs

Enterprise, Trade and Investment Minister Nigel Dodds said the closure was hugely disappointing for the workforce, the north west and the wider economy.

"(It) is a direct result of significantly lower wage costs in Asian competitors, foreign exchange and shipping costs which have created a competitive cost gap of some �15m per year," he said.

He said he was glad Seagate's wafer fabrication facility in Londonderry would not be affected by the announcement.

The minister said senior officials from Invest NI were working with the company and the Department of Employment and Learning on a joint approach to retrain and reskill the affected staff.

"I have also asked senior officials in Invest NI to be available to discuss the options for attracting future potential investment in the area with local representatives."

Mr Dodds added: "This situation clearly illustrates the need for Northern Ireland business to be competitive and to concentrate on higher added value products and services."