Intel shuts down plants in RP, Malaysia, US on slow demand

Published by rudy Date posted on January 23, 2009

WASHINGTON – Intel Corp., the world’s biggest maker of computer chips, will close its manufacturing plants in the Philippines and Malaysia, as well as its only remaining factory in Silicon Valley, cutting as many as 6,000 jobs, the California-based company said in a statement yesterday.

The company said it has been struggling with souring personal computer demand that has left its factories operating at less than their full capacity.

Intel said it would close its assembly test facility at the Gateway Business Park in Gen. Trias in cavite, displacing about 1,800 workers and foregoing an estimated P50 million in annual revenues for the local government.

Labor Secretary Marianito Roque said up to 60,000 workers in the country’s electronics sector could lose their jobs this year due to the global financial crisis.

“We hope that the [Intel plant closure] would be the last. The semiconductor industry is already getting hit. We have seen this early as three months ago. That’s why we have moved in and set up our daily monitoring center. We said the electronics industry has about 480,000 workers, a small percentage of which could be affected, maybe about 60,000,” Roque said in an ANC interview.

Aside from the cavite plant, Intel will also shut down two assembly test plants in Penang, Malaysia, a wafer fabrication facility in Hillsboro, Oregon, as well as its Santa Clara, California plant – a factory connected to its headquarters and the only one left in Silicon Valley.

The “assembly test” plants are where chipmakers send their finished wafers to be sliced into separate chips, put into individual packages, and tested to make sure they work.

The moves were designed to “align its manufacturing capacity to current market conditions,” the company added. Intel reported last week that the economic slowdown and slumping demand for personal computers sent net profit sharply lower in the fourth quarter of the year.

The actions will result in a reduction of 5,000 to 6,000 jobs, Intel said. It ended 2008 with around 84,000 employees.

Not all cuts at the affected plants will lead to job losses and some workers will be offered positions at other facilities, it said, adding that the restructuring will take place between now and the end of 2009.

Intel Philippines spokeswoman Ma. Teresita Pacis earlier said workers could also be transferred to the new semiconductor company Numonyx, which supplies flash memory for consumer and industrial devices.

We know this is a difficult time for our employees and their families and we will make available the best support systems to ease the transition,” the company said, adding that it is “deeply grateful” for the strong government support in the last 35 years.It has been key to our success,” the company said.

He said the closure of Intel’s Cavite plant was not unexpected, noting that the electronics and garments sectors are the two industries most likely to be affected by the global economic crisis.

He said the labor department has already received notices of companies reducing work hours, compressing workweeks and laying off workers this January.

Texas Instruments, another big US player in the sector, told the government last month it was laying off 400 workers from its semiconductor factory in the northern resort town of Baguio due to the global financial crisis.

Last week, Intel said its fourt quarter revenue fell 23 percent from a year ago period and profit tumbled 90 percent to $234 million. It also held back on giving detailed quarterly forecasts, citing economic uncertainty.

Analysts have been wary about Intel’s outlook for a year as chip sales slide. PC makers and other technology companies have been trimming inventory and cutting back on purchases.

Intel also faces competition from new cheaper chips made by Advanced Micro Devices, Inc.

On Tuesday, Intel said it was lowering prices on some of its processors, including price cuts of up to 40 percent on some of its higher-powered, faster quad-core chips.

Intel has also warned that it expects even worse results this quarter than the previous three months, with an expected revenue of $7 billion – abs-cbnNEWS.com, Reuters, AP, AFP
 
The Santa Clara, California-based company said the moves were expected to affect between 5,000 and 6,000 employees worldwide.

“However, not all employees will leave Intel,” the company said in a statement. “Some may be offered positions at other facilities.”

Intel said it will close two assembly test facilities in Penang, Malaysia, and one in Cavite, Philippines, in addition to wafer production facilities in Santa Clara and Hillsboro, Oregon.

The closures, Intel said, will take place between now and the end of 2009.

The moves were designed to “align its manufacturing capacity to current market conditions,” the company added.

Intel reported last week that the economic slowdown and slumping demand for personal computers sent net profit sharply lower in the fourth quarter of the year.

It said net profit in the last three months of the year plunged to $234 million, down 90 percent from a year ago.

Intel has also warned that it expects even worse results this quarter than the previous three months, with an expected revenue of seven billion dollars.

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