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National Semi cuts cellular unit

National Semiconductor says it's immediately closing a cell phone chip unit it earlier put up for sale but added that it is continuing talks to sell the division.

National Semiconductor said Wednesday it is immediately closing a cell phone chip unit that it earlier put up for sale, cutting the division's 340 positions.

The Santa Clara, Calif.-based chipmaker added that the restructuring plan it announced in February was on track and expects the cost cutting to save about $30 million per quarter.

The February restructuring plan called for streamlining costs by shedding employees and putting two units up for sale. National Semi said it was still in talks with several prospective buyers for its Information Appliance unit and its Cellular Baseband unit but has decided to close the latter.

The move will reduces its work force by about 340 positions and result in charges of $25 million to $30 million in its fiscal fourth quarter. National Semi's fourth quarter will end Sunday.

Despite the closure, National Semi said it is not changing revenue guidance for its fourth quarter. The company expects revenue for the quarter to increase 4 percent to 7 percent from the third quarter, or to about $420 million to $432 million.

The company will announce its fourth-quarter and year-end financial results on June 5.

The company said that about $16 million of the $30 million in potential cost savings is related to the Information Appliance unit, which includes its Geode processor for set-top boxes and other devices, and the Cellular Baseband unit. National Semi said these units drummed up less than 5 percent of the company's total revenue.

In February, the company said it would cut its worldwide staff numbers by 5 percent, from about 10,000 employees to about 9,500. National Semi reduced its work force by 500 in its third quarter; Wednesday's announcement brings the total cuts since February to 8 percent. National Semi will now have about 9,200 employees.