(Reuters) - Siltronic AG said on Friday that it plans to gradually cease the production of small diameter wafers at its site in the southern German town of Burghausen due to changing industry demands.

The German chip equipment supplier expects the process to be completed in the course of 2025.

About 400 people are employed to work on the small diameter wafers, about half of whom are on fixed-term or temporary contracts, the company said.

The aim is to reduce the core workforce through demographic change and partial retirement, and avoid layoffs, it added.

Chief Executive Michael Heckmeier said that demand has shifted and small diameter wafers are "approaching the end of their life cycle," which is impacting earnings negatively.

(Reporting by Chiara Holzhaeuser; Editing by Miranda Murray)