Nokia is planning to cut its staffing levels and close its research department, as the global slowdown hits demand for new handsets.
The Finnish mobile phone giant is poised to cut 400 jobs this year, and will trim a further 320 positions with the closure of the research and development site in Jyväskylä.
Peter Roepke, senior vice president at Nokia's Devices R&D unit, said the closure was "an unfortunate yet unavoidable measure".
He added: "We must adjust our resources to reflect reduced market demand in order to maintain our competitiveness in the future.”
The downturn is believed to have hit the market for mobile phones hard with consumers now less likely to upgrade to newer, cutting-edge phones in the midst of a recession.
This week, Japanese bank Nomura forecast that the smartphone market will show no growth during 2009.
However, Nokia is poised to resist the worst of the downturn with high-profile devices such as the Nokia 5800 XpressMusic.