Intel to shut Cavite plant; 1,800 workers affected

Reuters

Posted at Jan 22 2009 08:55 AM | Updated as of Jan 25 2009 07:21 PM

Intel Corp, the world's largest maker of microprocessors, announced Thursday that it is closing its manufacturing plant in General Trias, Cavite and offer severance packages to 1,800 employees.

Intel said the company will be closing two assembly test facilities in Penang, Malaysia, as well as its only remaining factory in Silicon Valley, cutting as many as 6,000 jobs.

"The company plans to close two existing assembly test facilities in Penang, Malaysia and one in Cavite, Philippines, and will halt production at Fab 20 an older 200mm wafer fabrication facility in Hillsboro, Oregon.  Additionally, wafer production operations will end at the D2 facility in Santa Clara, California," it said.

In the Philippines, Intel said approximately 1,800 employees will be affected and will be offered a severance package and a range of transition services.

"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. We are deeply grateful for the strong support that the Philippine government has extended to our operations in the country in the last 35 years. It has been key to our success," the company said.

The announcement comes a day after the world's largest maker of microprocessors used in personal computers slashed prices on a number of its chips and a week after it reported a decline in fourth-quarter revenue.

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.

"It's not a surprise given that their first quarter is probably going to be challenging, and they're trying to do what they can to cut costs in places that make sense," said Taunya Sell, an analyst at Ragen Mackenzie, a division of Wells Fargo.

Intel said it was not halting production at any of its more advanced factories.

Intel shares rose about 1 percent to $13.40 in after-hours trading, after rising 3.11 percent to close at $13.26 on the Nasdaq stock market.

Last week, Intel said its fourth-quarter revenue fell 23 percent from the year-ago period and profit tumbled 90 percent. It also held back on giving detailed quarterly forecasts, citing economic uncertainty.

Analysts have been wary about Intel's outlook for the 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.

AMD said earlier this month that it expected to post additional restructuring charges for fiscal 2008 and 2009.