SiliconBeat

Electroglas, the San Jose supplier of wafer testing tools to the chip making industry, filed for bankruptcy protection saying that “as a result of the global economic recession, demand for semiconductor manufacturing equipment has declined dramatically,” according to a press release it issued.

Earlier today the company filed notice with the SEC that its chief executive  served notice on Monday that he would be stepping down from his position Aug. 3.

In its press release today announcing the bankruptcy filing the company wrote:

“Over the past several months, Electroglas has undertaken significant efforts to reduce its expenses and working capital requirements in response to these unprecedented market conditions. These efforts have included significant work force reductions, salary cuts, mandatory time off for all of the company’s employees and significant decreases in non-labor expenses.”

Electroglas management  has been working with Needham & Co. and others to help it review its “strategic options,” including merging into another company or selling off its assets.

The current plan is for certain Electroglas bondholders to provide debtor-in-possession financing during the bankruptcy process and for the company to conduct an auction to sell itself. In the meantime the company said it expects to continue essential operations, including sales, product support, service and warranty programs.