RANCHO BERNARDO -- Cymer Inc. said it is laying off 100 employees, 10 percent of its total work force, and temporarily reducing employee pay by 10 percent.

Cymer, a maker of lasers used in semiconductor chip manufacturing, announced the reductions Thursday in response to a deteriorating sales outlook.

Shares of Cymer closed at $20.97 Friday, up $1.22 for the day.

The company said the cuts were part of its efforts to cut $50 million to $55 million from its annual expenses. Other reductions include:

- Suspension of its 401(k) matching program

- Suspension of annual merit pay increases and bonuses.

- "Significant" reductions in nonessential expenses.

New sales of Cymer's lasers have "declined sharply," and sales for existing laser installations are dropping, the company said.

Cymer is the world's largest supplier of lasers for semiconductors, but faces growing competition from Japan-based Gigaphoton. To firm up its lead, Cymer is developing lasers that can etch more powerful chips. The cost reductions will enable it to continue investing in these lasers, the company said.

Contact staff writer Bradley J. Fikes at (760) 739-6641 or bfikes@nctimes.com. Read his blogs at bizblogs.nctimes.com