the microchip industry in the North-East was dealt another severe blow yesterday with the announcement of up to 850 redundancies.

The American electronics firm Viasystems ended mounting speculation by revealing it planned to shed the jobs at two printed board manufacturing plants, in North Tyneside and South Shields.

The firm cited the "significant and continuing downturn in the global electronics market", prompting angry reaction from union leaders, who said the company had acted too hastily.

In a statement, Viasystems said last night: "The workforce has been informed through appropriate internal channels, as has the Amalgamated Engineering and Electrical Union (AEEU), the recognised union at both plants, and a 90-day consultation period has begun.

"The redundancy notification will affect a maximum of 525 roles at the North Tyneside plant as Longbenton and a maximum of 325 at the South Tyneside plant in South Shields. The two sites employ over 1,600 people."

AEEU regional officer Mel Barras said: "This is a disastrous blow for the workers in the local economy. The trade union is extremely annoyed at the company's knee-jerk reaction, bearing in mind similar scenarios that have occurred at Fujitsu and Siemens which, in recent months, have seen them resurrected.

"We believe the firm has acted too hastily. We understand that the market is hitting a bottom, but Viasystems should have waited for Christmas time when, traditionally, more mobile phones and electronic goods are bought."

Mr Barras said the union would take a few days to reflect on how to respond and would be contacting local MPs to lobby for Government help.

Viasystems closed a factory in the Scottish borders in 1998 with the loss of 1,200 jobs and transferred to Tyneside with £24m of Government help.

The announcement has thrown the spotlight on the stability of the industry which was seen as a saviour of the region's economy, following the decline in shipbuilding.

One NorthEast's director of operations, Mark Henderson, said: "With the industry growing so fast a downturn was inevitable. This is a severe blip, but I do not believe it signals a permanent downturn."

One NorthEast expected a turnaround in 12 to 18 months.

Mr Henderson said a task force had been formed to help employees retrain and find new jobs