January 2009 Breaking News!: Intel facility closure worldwide
- Intel closes Malaysia, Philippines, Oregon & California Operations
- Intel to shut down Cavite facility by year-end
First, it was Intel Makati that closed down. Then, Intel Philippines sold its flash division. Early April of 2007, Intel announced a $2.5 billion fab in China — that paved the way for speculations that it’s leaving the country.
Today, Eugene got wind of an imminent closure from purportedly existing employees of the Intel, Cavite plant.
From comments on the blog, there are claims an internal memo circulated yesterday that Intel is definitely moving out of the Philippines. Actual reasons vary — from high corporate taxes, to expensive electricity charges and even stealing of microchips. Our source says it’s about the structural integrity of the Cavite plant (that’s why the Laguna TechnoPark was an option).
As of this posting, I received an email from a former colleague who works at Intel Cavite and they were already informed yesterday that they are closing down the site in 6-9 months. I feel sad about this news since i knew a lot of people over there who are really good and now they need to find work. {comments Raymond on an earlier blog post}
A former employee of Intel, Cavite previously told me that when they asked the big bosses about their road map, none was given. The existing plans were only up to 2010. That prompted the employee to jump off and resign as he says it signals an unknown future for the company.
What’s more surprising is that the announced closure will happen as early as 6 to 9 months. Will post additional info later — trying to get a hold of that internal memo.
Intel may be really moving most of its Asian operations to China. That’s where cheap labor is abundant. Intel still has assembly test sites in Kulim & Penang, Malaysia, Pudong & Chengdu, China and Ho Chi Minh City, Vietnam.
Update: This has been confirmed by people from inside. The internal memo was circulated yesterday. There’s still no formal Corporate Announcement though. I’m still trying to get a copy of that memo.
Update 2: The plant will shut down in 6 to 9 month. The back-up plan is to find another location in the country, possibly Laguna TechnoPark or just totally shut down. Plans are not clear yet. Even 12 months lead time is not enough to shut down an Intel plant that big. Most employees are still in the dark.
Update 3: This is the copy of the internal memo we got from inside:
Intel gives update to employees in Cavite
Posted April 2, 2008Intel leaders in the Philippines told employees Wednesday that significant investments would be required to continue operating the CV1 building, which houses our Assembly and Test operations in Cavite.
In meetings with employees, Intel leaders said they are exploring multiple options for Intel’s long-term presence in the Philippines, which could include the possibility of a smaller operation. Efforts to improve the overall efficiency of Intel’s Assembly Test network have allowed the company to reduce our total amount of floor space required.
Intel leaders in the Philippines say that our plans in that country will be announced to employees by the end of Q2.
Okay, that’s vague.
Weird. Maybe the management of Intel Philippines is intentionally being vague about the whole thing? The impression employees are getting is one of closure, not moving to Laguna or scaling back operations. I think we can expect more developments in the coming days. (I’m already expecting Erwin Oliva to write an article about this in Inquirer.net, hehehe.)
Spoke to soon. Here’s Erwin’s article released a few hours ago: http://newsinfo.inquirer.net/breakingnews/infotech/view/20080403-128145/Intel-ramps-down-operations-in-RP
It may help clarify some rumors. Or not.
Twitter: Mindanao_Bob
says:
The Peso is so strong that American companies have little incentive to do business in the Philippines now. Electricity costs are among the highest in the world. Labor is expensive here compared to neighboring countries. Frankly, I’m surprised that Intel stuck around as long as they did.
yes… intel management announced that it plans to close down the CV1 factory within 6 to 9 months. this announcement was made yesterday. the management staff also presented the amount of separation pay employees will receive based on their tenure with the company. some employees are sad, but i think many are happy because of the very nice separation package
Whoah! This is something serious. I know a friend of mine who’s a fresh college graduate who just got hired by Intel. Will this mean his first job would be just 6 months long? Tsk tsk
That’s sad. So now, the “great” Filipino labor force is no match for the cheap-labor that China offers.
Money outweighs result efficiency nowadays?
Twitter: mparazgmail.com
says:
Maybe it means that the Philippines is too expensive for manufacturing-type operations, and software is the way to go (biased!)
It’s not just labor that’s cheap but the whole cost of doing business here. The way things are setup here you’d think the government didn’t want you to invest in a business…
Very bad for Intel to go to China. They’re well ahead in the chip market. It doesn’t make sense to rely on a labor force that will surely bring down your quality for a little profit. But what do I know, I’m just a Mac user.
Rumors also states that Dell Sites in manila would be closing..
Aside from manila, rumors has it that the India Sites will also close down. The reason stated on a site is that the US market is down and I guess that includes cost… The Site will be moved back to US. This will happen in 3 years.. Again rumors..
With Intel clearly the leader, why outsource to China and lose productivity, have increased costs of new equipment, train thousands of new employees, just to save a few bucks!
I think this was because of the merger that happened last year.
I would think long term, it would be beneficial for the company as they were building sites not only in China but also in Vietnam and Malaysia which I believe are greater in terms of operating capacity. At the end of the day, just like any other company, it is looking into operating cost that greatly affects the unit cost of the product being built. Let’s wait and see in 6-9 months with this so called “ramping down”.
I don’t think it’s really a “ramping down” as much as that is a cover for “lower labor rates”.
BrianB, Mac uses Intel chips.
Dont look down on China’s quality of labor. They have good programmers. Also they don’t complain a lot unlike Pinoys.
Strike dito, strike doon!
I mean macs deteriorated when Apple outsourced it to China.
Exit Packages were already presented to the employees. That’s the main evidence that the company is really on the heels of closing down the site.
By the way, Intel is not the leader, TI is.
Chinese labor is actually not cheaper, but more expensive than Philippines. Labor cost is not the only reason.
The $2.5 billion fab in Dalian, China has nothing to do with the Philippine site closure. A fab produces the wafers that supplies an assembly site like the Philppines, so building a Fab site means there is a need for more Assembly sites, not less. But then, there is the Assembly site Vietnam, and an expansion in Malaysia, and another site in China (not the Dalian Fab). The point here is that the Dalian site is a false flag. It was something else.
Hmm I think what really did intel CV in is vietnam (if truly it will be closing down). Being an Intel-Ex employ I really am saddened, pero sayang kakaalis ko lang sana mas maganda nakuha ko package hehe. Anyway after 30 plus years in the philippines it ruly is a legacy. pero pano ka nmn to compete with cost in terms of china and vietnam. ang dami govt incentives dun. the only viable reason to set up here is the wrokforce, and now that is deteriorating because of the level of education in science and techno. coupled with a weak dollar plus some integrity issues (theft of chips, that really happens. as a business will u still continue to invest here?
The LiveJournal blogger I quoted in my post left a comment clarifying that until Intel makes an official announcement, everything is just complete speculation. It’s a bit definite that Intel will be closing CV because of structural defects but it’s still possible that they’ll move elsewhere in the country such as in Laguna.
hmmmm….. that’s the reason why I hate to work for a company… you’ll be hired today soon, you’ll be laid-off….I rather put my own business….
It would be hard and costly to transfer to another building with all the machinery and tools. I think building transfer would be hard. Significant amounts of time, labor and money are needed to do this. And to do this in just about 6 or 9 months, while doing production on the fly? It’s practically impossible.
Paging MERALCO, taas daw ng singil nyo!
Totoo naman kaya maraming business nalulugi dahil sa taas ng electricity rates!
Hoy Meralco maawa naman kayo sa mga pinoy na nawawalan ng trabajo dahil nagsara ang company dahil kaswapangan sa PROFIT!