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Intel shutters RP factory, lays off 1,800 employees


MANILA, Philippines - Intel Corp., the first US semiconductor firm that established a facility in the Philippines, will shutter its Cavite factory, laying off 1,800 workers and an undisclosed number of executives this year. With this latest retrenchment, more than 5,000 workers in Philippine semiconductor companies have already lost their jobs last year, as chipmakers – including Intel and Advanced Micro Devices Inc. (AMD) – continue to struggle with a lower demand for electronics devices. Intel’s announcement to shutter its 19.83-hectare assembly test facility – a factory where chips are packaged and tested – was made on Thursday afternoon, a week after the Santa Clara, California-based company reported a 90 percent drop in fourth-quarter profit last week. Besides the Philippines, the company is also closing similar assembly test facilities in Malaysia and will halt production at plants in Hillsboro, Oregon, and Santa Clara, California, where older-style wafers are being produced, an Associated Press (AP) report said. Intel, which began Philippine operations in 1974, said between 5,000 and 6,000 jobs would be affected, but added that some employees would be offered positions elsewhere in the company, the same AP report said. “The impact of the economic downturn on our business was more severe than we anticipated and the outlook is uncertain," Intel Philippines said in a statement. The company has “decided to restructure some of our manufacturing operations by taking older capacity off line and closing five factories during the course of 2009," it added. Next: Retrenched employees to get “generous" retirement packages Retrenched employees to get “generous" retirement packages Meanwhile, Intel’s employees in the Philippines will be given “generous" early retirement packages, skills training, and livelihood programs, including how they can establish small businesses, a local representative of the chipmaker told GMANews.TV on Thursday. The retirement packages “are designed to take care of employees and their families," Arlita Narag, Intel’s corporate communications officer in the Philippines said. Employees who have stayed longer will receive higher packages, she said, adding that the tenure of its average worker is 10 years. Besides bonuses, retrenched employees would receive medical and dental benefits for themselves and their families, Narag said. Although Narag was unable to disclose how many local Intel executives will be laid off, the company said it would retain its sales and marketing force, which has less than 50 employees. The decision to shut down its local facility didn’t come as a surprise to Intel employees, Narag said. Intel’s decision to shutter its local facility was made “a few weeks back," she said, refusing to specify a definite period. As early as 2005, there have been unconfirmed reports about the company’s intentions to stop local operations. These reports continued to persist as Intel opened a $605 million facility in Vietnam a year later. Although officials maintained that the Vietnam facility would not affect local operations, Intel’s Cavite plant reportedly failed to secure additional funding from the company’s $1 billion investment plan for Asia in 2006. During the same year, Intel invested $270 million and $300 million respectively to expand its Malaysian and Chinese facilities. Next: Intel closure seen to cut Philippine exports Intel closure seen to cut Philippine exports The closure of Intel Philippines is expected to weaken the country’s overall export performance for this year and may prompt the Philippine Economic Zone Authority (PEZA) to cut its projections. Although value of Intel Philippines’ exports fell by 10 percent to $5.8 billion in 2008 compared to the previous year, the company remained the biggest contributor to PEZA’s total exports. Approximately 15 percent of PEZA’s total annual export revenues – worth $40.54 billion last year – are sourced from Intel. Appetite for electronics and semiconductors has continued to fall owing to the global slowdown which cuts demand for goods and services. Last month, Intel Philippines’ exports fell to $255 million from $444 million during the same month of the previous year. Despite the slowdown, PEZA earlier predicted a five percent growth in exports for 2009, optimistic that export receipts will be unaffected by the crisis. Meanwhile, Intel's smaller rival, Advanced Micro Devices Inc., is set to report its quarterly earnings Thursday in the US. The company is in the midst of a massive restructuring, having changed CEOs, sold nearly a fifth of the company to an investment arm of the Persian Gulf state of Abu Dhabi, agreed to break off its factories in a moneysaving move, and announcing major job cuts. AMD plans to cut 1,100 workers in its third big round of layoffs over the last year. AMD had cut 2,200 workers in the previous two rounds of firings. - GMANews.TV with AP
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