WOLFSON Microelectronics is cutting its workforce as it battles with tough market conditions for consumer electronic goods.
The restructuring sees Wolfson planning to stop making some of its older products for what it described as "low growth markets".
As a result it is taking a $2 million (£1.24m) charge for staff severance payments, with up to 20 UK jobs and others around the world under threat, in the final quarter of the year along with a further $2m of non-cash asset write offs. The company expects to save around $10m a year.
Wolfson employs about 280 permanent staff at its Edinburgh headquarters, with a further 70 at Newbury, Berkshire, and also has some contractors.
Its other offices are in Asia, Australia and the US.
Mike Hickey, Wolfson chief executive, confirmed that consultations with staff affected by the plan were just beginning.
He said: "By the end of [the first quarter of 2014] we will reduce on a worldwide basis our staff costs by around 10%, but that includes permanent and contract employees."
In third-quarter results posted yesterday Wolfson's revenue was down 17% year-on-year, from $53m to $43.9m.
That saw it record a pre-tax loss of $3m in the three months to September 29, compared with a $1.6m profit in the same period last year.
Wolfson had previously flagged up that its sales for 2013 would be lower than anticipated after a major customer - thought to be Blackberry - cancelled a product roll out, while other clients have postponed some launches until 2014.
Mr Hickey said the restructuring would mean that even if revenue and margins only stayed flat going into 2014, the business would be break even.
However he expected both those segments to improve next year.
He said: "We are trying to put ourselves in the best position possible to support fast paced growth.
"We have the right parts [and] the right customers. We are dependent on those customers selling stuff through and not cancelling a programme or getting bought or going private or all of those things.
"We have had a little bit of that this year, and we hope that turbulence has calmed down as the underlying technology trends are in our favour. We have world leading products in these growth categories."
Wolfson highlighted its growing position in the Chinese smartphone and tablet market, which is the largest in the world, saying it was now shipping to more than half the manufacturers there with two more added in the quarter.
Mr Hickey said: "We are very encouraged by our progress there and how our footprint has expanded. There is a lot of [other] consumer electronics these companies do as well.
"So once we are their go to person for audio, we feel that can expand out and it is definitely a focus for us in the next few years."
Sales to Wolfson's largest customer, widely thought to be Samsung, were at 35% of total revenue in the quarter.
Earlier this year Wolfson signed a multi-year intellectual property and supply deal with Samsung, which has resulted in smartphones, tablets and cameras carrying products from the Scottish company.
Wolfson said it was seeing a growing take-up from automotive suppliers for noise cancellation and voice activation components and software.
It has also just launched an audio card for the popular $25 Raspberry Pi computer. Wolfson said its add-on, available in the next few weeks, would allow the device to be modified, including to become a voice-controlled wireless home media network, capable of playing music.
Analysts at JP Morgan maintained a neutral rating and said: "Wolfson has been hit by the double whammy of a weak smartphone market and large customer Blackberry substantially losing share."
Shares in Wolfson closed down 4p, or 2.7%, to 142.5p.
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