Within that unit--dubbed the Precision Equipment Co.-- Nikon (Tokyo) is also consolidating its production sites in Japan. And it is also ''streamlining'' its service units in Europe, Singapore and the United States.

In total, Nikon is planning to curtail fixed cost of approximately 8 billion yen ($84.4 million) by cutting 800 out of 2,900 manufacturing jobs in Japan. It is also cutting about 200 out of 1,700 overseas marketing and service jobs. Nikon is estimating a special loss of 4 billion yen ($42.2 million) or more for the measures in this fiscal year.

Nikon is the world's second largest lithography vendor, next to ASML Holding NV of the Netherlands. One of Nikon's biggest customers is Intel Corp., which is buying fab gear. But other chip makers are holding off fab tool procurements amid the current downturn.

Recently, citing the IC downturn, the parent company forecasted its first annual operating loss in 11 years. ''The Precision Equipment Co. with IC/LCD steppers and scanners businesses is facing further severe business conditions amid abrupt and sharp economic decline since the latter half of the last year,'' according to Nikon. ''To cope with such environments, it have endeavored to improve products competitiveness, adjust production, adjust workforce to an appropriate level, reduce business expense, lower fixed cost, etc.''

The moves follow identical steps taken by rival ASML and other fab tool vendors. The fab tool market is seeing its worst downturn in history.

Like most, Nikon is cutting costs. As part of the moves, the company's four production subsidiaries in Japan will be integrated into two subsidiaries. With this integration, Nikon will reduce its workforce within its Kumagaya plant.

The four subsidiaries are Tochigi Nikon Precision Co. Ltd., Mito Nikon Precision Corp., Sendai Nikon Precision Corp. and Zao Nikon Co. Ltd. They will be merged to Tochigi Nikon Precision and Zao Nikon via corporate split and merger as of Oct. 1, 2009. Details of the new companies including will be decided later.

After the reorganization of these four subsidiaries, Nikon's Kumagaya Plant and Tochigi Nikon Precision will be in charge of production for IC steppers and scanners. Nikon's Yokohama Plant, its Yokosuka Branch and Zao Nikon will be in charge of production for LCD steppers and scanners.