Intel closes Malaysia, Philippines, Oregon & California Operations

Intel closes Malaysia, Philippines, Oregon & California Operations




Got the official statement from Intel Corporation today and it turns out bigger than we originally expected and involves around 5,000 to 6,000 employees worldwide, including 1,800 in the Philippines. Copy of the full disclosure below:

Chuck Mulloy
Intel Corporation

Santa Clara, California, Jan. 21, 2009 – Intel Corporation today disclosed plans to restructure some of its manufacturing operations and align its manufacturing capacity to current market conditions. The company will consolidate and streamline some older capacity without impacting the deployment of new, leading-edge 45-nanometer and 32-nanometer manufacturing capacity.

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, Ore. Additionally, wafer production operations will end at the D2 facility in Santa Clara, Calif.

The actions at the four sites, when combined with associated support functions, are expected to affect between 5,000 and 6,000 employees worldwide. However, not all employees will leave Intel; some may be offered positions at other facilities. The actions will take place between now and the end of 2009.


 

Here’s the copy of the statement for the Intel Philippines operation in Cavite:

Arlita Narag
Corporate Affairs
Intel Technology Philippines Inc
Gateway Business Park, Javalera
General Trias, Cavite

As announced by Intel Corporation today, the impact of the economic downturn on our business was more severe than we anticipated and the outlook is uncertain. As a result, we have decided to restructure some of our manufacturing operations by taking older capacity off line and closing five factories during the course of 2009. Included in this action will be the closure of two of our assembly test facilities in Penang, Malaysia; and the assembly test facility in Cavite. Two of our wafer fabrication facilities in the United States will also end production.

Our manufacturing operations in Cavite will cease this year. Approximately 1800 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.

Our Sales and Marketing organization will not be affected by this action. Our major social responsibility programs in the Philippines will also continue, particularly in the area of science and math education.

It’s possible all this consolidated operations will all go to the China plant. Not a good sign for the year. And to think, it’s only January.



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

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32 Responses

  1. Jerome G. says:

    I had the chance to visit the Penang plant 3 years ago and its a huge facility (way, way bigger than Cavite). Surrounding the facility are smaller service companies doing business with Intel and other chip makers (AMD, etc.). If the Malaysia pullout is big, this would mean trouble for a lot of businesses in the region.

  2. Ed says:

    not surprised.. a few of my intel engineer friends were offered transfer papers to China as early as 1 1/2 years ago. there has been constant talk of downsizing in Santa Clara and many engineers were either laid off or had offers to move to China with an extensive bonus structure. Its a lucrative payoff for those who are lucky enough to get the offer because the cost of living in China is next to nothing, which obviously allows you to stretch your salary farther.

    The one that surprises me is the Fab in Oregon.. i know of people that transfered there only a year ago.

  3. gen 3 says:

    Jerome G is correct. Malaysia Operations is way bigger than Cavite (like 1 factory vs 4 factories). They also have design and development centers there that Cavite doesn’t have.

    Closing of Fab20 and D2 I believe will be no surprise to Intel folks as there are really quite old.

    Ed, you might be talking of the D1D fab. This is also in Oregon and the technology this fab is supporting is up to date.

    I don’t know if it’s just me but it seems that the title of the article is quite misleading (except for the case of Cavite of course). It gives people the impression that all Intel operations at Malaysia, Oregon and California are closing down. A couple of campuses are located on the said sites aside from the ones stated above (like Kulim in Maysia and Folsom in California) which are still in operation.

  4. sleepy says:

    tsk tsk.. bad..

    i was actually waiting for there planned upcoming new VIDEO CARD. parang inde na ata matutuloy.

  5. BrianB says:

    Abe, stupid question: Will this affect chip-making? What about R&D? Will we see core 4 laptops?

  6. yuga says:

    @BrianB, according to Intel Q4 2008 earnings report, demand was down across the board (except for netbooks). This means Intel has over capacity in chip-making facilities. R&D will still be on schedule and 4-core laptops should be out within the year.

  7. calvin says:

    dami sa tech industry affected ah. sony, intel, amd, motorola. pati microsoft din.

    apple and nintendo ata wala.

  8. Ricardo Tuason Jr says:

    Actually the main issue here is what will be the affect to our economy and Filipino countrymen of this problem and how can we prevent/improve our system in coping up with other progressing countries…

    As Filipinos we should either strengthen our current industry but *is there a strong industry? or develop a more fluent industry than can be demanded by other nations which only our country can give.
    *sighed

    ^_^ ……………..just a note which happens to pop up in my head…………
    hehe… How come other countries progress Vietnam, India etc. Why we are stuck from the 70’s. If they can do why not our people.

  9. Jerome G. says:

    @Ricardo Tuason Jr: The problem I see here is that the Philippines in general does not have a strong R&D/Entrepreneurial culture that is similar or at least some part of it, to that of the Valley that can benefit the local population (as consumers). If domestic consumption can be improved, then there would be local businesses that can be resilient from external random shocks.

    I’m pretty sure that some of those that have been or will be affected by these redundancy actions will end up building their own businesses, but I’m pretty positive as well that a huge chunk will still maintain the status quo mindset, that is to look for another company and hope for the illusion we call “job security.”

  10. sky says:

    What’s tough about those big companies laying off workers is that these lay offs are sort of biased. If an American company had to choose between laying off a highly skilled Filipino engineer and a mediocre American worker, who do you think would get fired?

  11. issai says:

    everyone’s affected. there’s no such thing as job security right now. i have to live with that everyday, i just hope and pray i don’t lose my job for my family’s sake.

    just have enough faith that the pinoys can find new jobs and still be globally competitive. time for us to swallow our pride and accept that everyone, i mean, everyone is affected by the downturn.

    also time for us to realize, this is now a global economy. we are a global village. and we can compete in this global village and we will get through this.

  12. jules says:

    i am pretty sure that things will get better in the future…

  13. Hmm i think due to population explosion and continuing downside turning of the world market is the main reason why many people now are suffering for job loss.

  14. Jacobato says:

    let me correct a few items… intel malaysia has two factory locations – penang and kulim. penang has four factories, two of them closing soon. kulim has three factories which have just been expanded. intel’s operations in china is not the only game in town. vietnam will become their largest factory in assembly and test, with about 500k square foot of floor area. in china, a fab is being built, in the port city of dalian. it is wrong to assume operations will be consolidated in china. intel as a rule doesnt consolidate in just one location, its a risk mgt strategy. some of these info can be found in http://www.intel.com, which means sometimes we just have to do our homework.

  15. yuga says:

    @jacobato – these types of restructuring are never final. I requested a meeting with Intel Corporate Affairs back in April 2008 to clarify some of the rumors and assumptions. They declined to comment saying everything that’s been put out in the Press Release was all they could give. Based on the track record in the last year alone, the plants could be closing or not. They could be consolidating or not. Who knows. They might just announce that next week. =)

  16. Jacobato says:

    am trying not to make obvious to you i am an insider, anyway – vietnam and china will exponentially grow as manufacturing hubs, with china hosting a fab in dalian city. it is final. the only thing that is not final are the dates, the market is sluggish hence target dates are moving. i have seen both dalian and vietnam facilities, they are huge, they reflect a future investment that is large enough to provide intel’s assembly and test requirements for the next 10-15 years. so please – there should not be speculations anymore where intel is going. and corporate affairs are spokespersons, not operations people, they wont know the operating details or even if they do, they will not tell you.

  17. bulate says:

    @yuga

    intel’s latest actions are just part of their on-going structure and efficiency program which started 2 years ago. they are well ahead of the industry when forecasting crises like this. the lay offs and downsizing were already happening all the way back in 2006 although it was just only a few months ago that it really made headlines partly because of the global recession. intel’s strategy during tough times is to spend their way through research and development. it can be argued that the money they will spend will be coming from these closures.

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  20. BoyKolokoy says:

    We lost Intel Cavite but we gained Texas Instruments Clark. I believe Samsung is building another plant in the Philippines. We win some and lose some, that’s market dynamics for you. Anyway, I also heard that they laid off a lot of workers in Shanghai when they transferred the IC plant to Chengdu.

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