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Intel To Shutter Five Fabs, Cut Jobs

Chip giant says 5,000 to 6,000 employees will be impacted by halt to operations at older facilities in Malaysia, The Philippines, Oregon and California.

"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 Intel statement said.

The five plants will all be shut down by the end of 2009 to better align Intel with "current market conditions," the company announced.

Intel said the restructuring of its silicon fabrication arrangements would not impact the deployment of its current 45-nanometer manufacturing capacity or the transition of some assets to 32nm as planned for product release dates near the end of the year.

While some 5,000 to 6,000 employees would be affected, Intel said "some may be offered positions at other facilities." About 1,000 workers at the Hillsboro, Ore. fab could lose their jobs, according to Oregon Business News based on a report from The Oregonian.

Intel, reporting fourth-quarter earnings last week, saw its fourth-quarter revenues drop 19 percent against the previous quarter, the first time in years that the company did worse in Q4 than in Q3.

Revenues dropped year-over-year by 23 percent and profits fell a whopping 90 percent against Q4 2007, as Intel saw an "unprecedented, rapid hitting of the brakes in the fourth quarter" in terms of demand for its products from its distribution channel, branded computer makers and components makers in Taiwan and China, CEO Paul Otellini said last week.

Without offering formal first-quarter guidance, Otellini indicated that revenues could drop 28 percent compared to the year-ago period. Bloomberg this week cited an internal Intel memo in which Otellini reportedly told employees that the company's prospects for finishing the first quarter in the black was "too close to call."

A loss for the quarter would end 87 straight profitable quarters for Intel.

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