LONDON — TSMC and UMC, the world's two leading providers of foundry manufacturing services, are preparing to cut costs by up to 20 percent, according to a Reuters report that did not name its sources.

The action is the result of an abrupt downturn in sales of computers, mobile phones and flat-screen TVs and automobiles and a corresponding drop in demand for integrated circuits. The oss of consumer confidence has intensified since the closure of Lehman Brothers bank on Sept. 15.

The world's leading foundry Taiwan Semiconductor Manufacturing Co. Ltd. (Hsinchu, Taiwan) had already instituted a hiring freeze (see below). Now department heads have been told they may have to cut costs by 20 percent in the near future, through lay-offs or by making people take mandatory unpaid leave, the report said citing two unnamed sources close to the company.

United Microelectronics Corp. has also told employees they may be forced to do a four-day week and take their usual fifth work day as unpaid leave, the report added citing a third anonymous source.

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