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Intel to close RP plant

Vol. XXII, No. 123 [ BusinessWorld Online ]

Friday, January 23, 2009 | MANILA, PHILIPPINES

1,800 to lose jobs; 6,000 to be axed in global streamlining

CHIPMAKER INTEL CORP. WILL CLOSE its manufacturing plant in the Philippines, laying off 1,800 workers, as part of a global streamlining effort that will affect four other factories in two more countries and trim as many as 6,000 jobs.

Intel, the world’s largest maker of PC microprocessors, announced that the General Trias, Cavite assembly test facility would be closed along with two others in Penang, Malaysia, a wafer fabrication facility in Hillsboro, Oregon, as well as its Santa Clara, California plant — a factory connected to its headquarters and the only one left in Silicon Valley.

The actions will result in a reduction of 5,000 to 6,000 jobs, Intel said. It ended 2008 with around 84,000 employees.

Not all shutdowns will lead to job losses and some workers will be offered positions at other facilities. The restructuring will take place from now to end-2009.

Intel’s local unit, Intel Technology Philippines, Inc., yesterday issued a statement saying "The impact of the economic downturn on our business was more severe than we anticipated."

"Our manufacturing operations in Cavite will cease this year. Approximately 1,800 employees will be affected and will be offered a severance package and a range of transition services."

Intel Philippines corporate affairs manager Arlita P. Narag said the shutdown would be made in the second half of the year. She said the company had already ramped down production last year, resulting in the reduced workforce of 1,800 from 3,000 previously.

Intel, the first American semiconductor firm in the country, has invested over $1.5 billion in the Philippines. Its Cavite plant is located on a 20-hectare site in Cavite’s Gateway Business Park.

Its exit will mark another major blow to the local semiconductor sector as a result of the current economic slowdown. Late last year, Texas Instruments said it would lay off around 400 employees from its facility in Baguio City due to slowing demand.

"The semiconductor industry is already getting hit," Labor Secretary Marianito D. Roque said in a television interview yesterday, adding that the government was giving counselling and retraining to "about 60,000 workers that could be affected nationwide".

Plants employing 19,000 people have so far reduced shifts or working hours, he added but did not say how many had been laid off.

"We have to admit that this is not business as usual in the Philippines for the electronics sector and in the garments sector as well," Mr. Roque said.

"These will be the two particular areas that would be affected by the global financial crisis."

The electronics sector accounts for about 70% of the Philippines’ exports and employs 480,000 workers.

Mr. Roque said the government expects the business process outsourcing sector to take up some of the slack, with a "nominal growth" in the call center industry creating about 130,000 jobs this year.

Arthur J. Young Jr., chairman of the Semiconductors and Electronic industries in the Philippines, Inc., yesterday said "We are obviously very sad with [Intel’s] departure ... but it’s not surprising," indicating that high power rates could have been an factor.

"We need to find out what went wrong and look at it as an opportunity to make us more competitive," he said.

"We did this to ourselves because we ignored the things we could have done to make things better for Intel in the Philippines a few years back," he said, referring to the country’s failure to convince Intel to build a $300-million facility here last year. The company eventually decided to bring the investment to Vietnam.

Last week, Intel said fourth-quarter revenue fell 23% from the yearago period and profit tumbled 90%. It also held back on giving detailed quarterly forecasts. Analysts have been wary about Intel’s outlook for the year as chip sales slide. PC makers and other technology firms 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% on some of its higher-powered, faster quad-core chips. — reports from Paolo Luis G. Montecillo, Reuters and AFP


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