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Intel not spared in this slump


Thursday, January 22, 2009 The other shoe has dropped at Intel Corp., as the chip giant will close two fabs and three IC-assembly factories.

The actions at what comes to four sites, when combined with associated support functions, are expected to affect between 5,000-to-6,000 employees worldwide.

Faced with the current IC downturn and slowing sales, the company plans to close two existing assembly test facilities in Penang, Malaysia and one in Cavite, Philippines. It will halt production at Fab 20, an older 200-mm wafer fabrication facility in Hillsboro, Ore. Additionally, wafer production operations will end at the D2 facility in Santa Clara, Calif.

The company said it will consolidate and streamline some older capacity without impacting the deployment of new, leading-edge 45- and 32-nm manufacturing capacity. The actions will take place between now and the end of 2009.

Some but not all of the actions were expected.

Last year, Intel was said to be "ramping down" its IC-assembly and test facility in the Philippines. Intel Technology Philippines Inc. (ITPI), a subsidiary of Intel, was one of Intel's major assembly operation centers in Asia.

It employes around 3,000 employees, according to Intel. To date, Intel's total investments in the Philippines is $1.51 billion.

Intel's other IC-assembly sites are located in China, Malaysia and Vietnam. But over the years, Intel has poured more money into China, and, to some degree, Vietnam.

Then, in December, an analyst said he expected Intel to cut 6-to-7 percent of its total headcount, or roughly 5,000 to 6,000 employees. This was part of a series of cost-cutting moves that could save the company as much as $1 billion annually, according to FBR Capital Markets.

Intel denied it planned to implement layoffs.

Recently, Intel said fourth quarter 2008 net income fell to $234 million, or 4 cents per share, hit hard by a $1.2 billion loss on equity investments related to its interest in Clearwire Corp.

In the year-ago comparable quarter Intel posted net profit of $2.3 billion, or 38 cents per share. Revenue in the three months ended Dec. 27, 2008 sank to $8.2 billion, down 23 percent as previously predicted, from $10.7 billion in the comparable 2007 quarter.

Intel said it cannot "predict product demand" for the first quarter and has therefore declined to offer its typical revenue and profit forecast but instead will work off a temporary number that calls for a 15 percent sequential sales decline on top of the 19 percent drop from the third quarter of 2008.

The world's biggest semiconductor company is considered the bellwether for the rest of the chip market and its lackluster fourth quarter performance coupled with its unwillingness to offer guidance for the ongoing quarter indicates the industry might be headed for one of its worst recessions in decades.

Recently, rival Advanced Micro Devices Inc. said it plans to cut an additional 900 jobs during the first quarter of 2009 as part of a series of moves designed to reduce the chip maker's workforce by about 9 percent.

AMD (Sunnyvale, Calif.) will shed another 200 jobs through a combination of attrition and the previously announced divestiture of its handheld business, the company said.

AMD had two major rounds of layoffs in 2008. Late last year, AMD reduced its workforce by about 600 employees. Last July, it announced the layoff of 10 percent of its workers.

Other cost control measures announced Friday included temporarily reducing employee base pay and suspending some benefits programs.

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