Mike McKay on a ray of hope for the Siemens plant

Siemens is believed to be close to a deal with an unnamed Chinese telecommunications company which would buy a controlling stake in the factory, but leave Siemens in control of day-to-day operations.

Such a move could save almost all the 1,100 jobs in the firing line.

Siemens said that the decommissioning of the factory has been put on hold while the company talks to potential buyers.

Lay off of workers has already begun with the remaining 600 at the plant due to finish up today.

"Siemens has been talking to a number of interested buyers...we remain cautiously optimistic about the plant and we thought it appropriate to delay any work on decommissioning while talks continue," said Seimens personnel director Llew Avis.

Fall in woldwide demand

Siemens announced in July that it intended to close the plant.

Jobs hang in the balance

The downturn in the world computer chip market which has seen prices fall to a fraction of their levels of just a few years ago was behind the decision, the company said.

Prime Minister Tony Blair's own constituency of Sedgefield is home to some of the threatened workers and he is said to have been taking a close interest in rescue plans for Siemens along with Trade and Industry Secretary Peter Mandelson.

Alan Campbell, MP for Tyneside, has confirmed that the government has been in meetings with a number of companies over a possible buy-out.

Mobile phone hopes

Industry analyst David Manners from Electronics Weekly told BBC Radio's Today programme that telecommunications companies are the main buying candidates because the plant could be readily adapted to making mobile phone chips, in a market still enjoying strong demand.

He says the Shanghai Radio Company is a possible buyer - it has been looking to add chip technology to its production base.

The Siemens plant was due to cease production on Monday, and only 600 staff remain at the factory.