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July 11, 2008

Intel likely to move fab to Cabuyao, Laguna

When the rumor that Intel Philippines was facing an impending closure in April this year, the company corrected this — saying that it’s weighing its options and could transfer its plant somewhere else. June has past and Intel officials have not released anything. I’ve sent out interview questions in the hopes of getting some updates.

For the meantime, here’s what a contact of a friend told me about Intel’s colorful past and possible future in the Philippines.

  • Several locations have been considered but the NXP Semiconductors (formerly Philips Semiconductors) plant in Cabuyao, Laguna is the most likely candidate. NXP laid-off over 400 workers back in March 2007 from their Cabuyao plant and moved about 200 employees to their newer Calamba station. Intel could be buying/leasing this Cabuyao plant from NXP.
  • Attrition rate is somewhere between 7-10% in the Cavite plant and management has put hiring on hold. Employee count plateaued at a high of 6,500 to a current low of around 1,500. This is partly due to the Flash division spunned off (now Numonyx, founded March 31, 2008 by Intel Corporation, STMicroelectronics and Francisco Partners) and some engineers moving over to the new company.
  • Severance packages were offered but still uncertain. The least Intel Philippines could offer is 3 months salary, based on previous severance packages it offered.
  • Hardware/CPU pilferage is a normal occurrence not unique to Intel. Almost all plants suffer the same fate — Cypress, Maxim, Fujitsu, Hitachi — it just happens (only in the Philippines?).
  • The Merom (Core 2 for laptops) and Penryn (mobileCore 2 Duo) chips were manufactured out of the Cavite plant. Since both are based on the 45 nm process, it’s unlikely this fab will be phased out.
  • Ever since the move from the Makati plant to the Cavite plant, only a foreigner holds the position of General Manager. This was due to a management issue that led Intel into far-flung Trece Martires instead of the Laguna Technopark.

Let’s face it, it’s now cheaper to operate a plant in Malaysia, Vietnam and China than in the Philippines – high cost of fuel, high inflation rates, high power rates and not so cheap labor cost. Besides, exemption from corporate income tax is only up to eight years for companies operating in special economic zones like the Laguna Technopark.

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13 Responses to “Intel likely to move fab to Cabuyao, Laguna”

  1. koolitz says:

    not to mention mga alleged nakawan sa loob ng Intel mismo :-)

  2. matt
    Twitter: kicksmashpop
    says:

    I read your previous post about Intel closing up its Philippines plant. Then I asked this to a family friend who is up to now working in Intel. He told me they’re very much not closing up. :)

  3. Anino says:

    Papasok naman ang Samsung.

  4. SY says:

    some accuracy check:

    - there is no “fab” in the phils.
    - headcount is much much higher than 1500
    - severance is definitely not 3 months
    - pilferage in not only in the phils
    - the foreign GM thing is a global parctice

  5. zouze says:

    dami palusot ah

  6. gen 3 says:

    yup Intel Philippines is an assembly and test site. not a fab. there’s a big difference between the two.

    As what SY mentioned, there is no existing wafer fabrication facility here. Therefore, it doesn’t follow that Intel will stay here because it ships out 45nm products. Wafers are produced from other sites and units can be assembled and tested on other sites like China. I guess it’s the cost per unit comparison that matters for Intel’s survival here in RP.

  7. Jerome says:

    I’m not surprised. I used to work in the Semiconductor industry and most of the big players are in Laguna (except Intel). Also these companies work with each other in various aspects, outsourcing testing, packaging, etc., so its not all Intel processes happening inside the plant. Logistics wise, its a good move.

    Also, pilferage happens in all the semicon plants, not just Intel. the problem is when one company moves devices to an outsourced service and that’s where the the higher occurrence of pilferage happens

  8. WWID:11XXXXXX says:

    I work here @ Intel CV..Wala pa naman pong abiso, tagal nga..Ausgust na maya-maya pa.

  9. Andrew says:

    Cost of labor is rising everywhere including the countries you mentioned. Vietnam? Their inflation is at 27%, the highest in Asia. I doubt Intel would think of setting up there.

  10. Me says:

    Correction:
    Core 2 Duo (aka Merom) is being tested and assembled in Intel Tech Phils and this is based on the the 65nm process not 45nm.

    Another fact that is not related to the discussion but worth mentioning; the microprocessor (aka Merom Santa Ynez) that is used in the Mac Book Air is ONLY assembled and tested in Intel Tech Phils.

  11. ww1058xxxx says:

    consider it transfering to vietnam our machine are alredy there….higher managemnet is getting there to close the company

  12. Bea says:

    I BELIEVE THAT THE NATION MUST ENCOURAGE BUSINESSES TO STAY BY GIVING INCENTIVES SUCH AS CORPORATE TAX REFUNDS TO GIVE THE COMPANIES A WAY OF SORTING OUT THEIR OVERHEAD EXPENSES AND SOME SORT OF INTERACTION BETWEEN THE CORPORATION AND THE STATE. THE PHILIPPINES IS A COUNTRY WHERE ALL THINGS CAN BE HANDLED PRETTY EASILY AND WITH DIPLOMACY PERSONALLY AS WELL AS PROFESSIONALLY. BEING AN ENGLISH SPEAKING COUNTRY IT IS PRETTY EASY FOR COMPANIES TO DO BUSINESS HERE IN THE PHILIPPINES AS WELL AS HIGHLY EDUCATED COLLEGE GRADUATES WHOSE LEVEL OF INTELLIGENCE IS HIGHLY COMMENSURATE WITH WORLD CLASS LEVELS OF KNOWLEDGE.

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Abe is the founder and Editor-in-Chief of YugaTech. You Can follow him on Twitter @abeolandres.

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