Intel to shut four plants, lay off 6,000
Weak PC sales, low-cost netbooks, rival chips from AMD to blame, say analysts
Computerworld - Amidst a bevy of bad news in the PC market, Intel Corp. took two corrective steps this week, aggressively slashing prices on chips on Monday and announcing today that it will close four chip plants and cut as many as 6,000 jobs.
Analysts laid the blame for Intel's actions on weak PC sales combined with tightfisted consumers choosing low-cost models such as netbooks. They also said impressive new CPUs from rival Advanced Micro Devices Inc. were a factor.
Monday's CPU price cuts by Intel -- as much as 40% on some high-end desktop chips -- were aimed at "stimulating demand to consume [chip] inventory," said Ian Lao, an analyst at In-Stat. "Fabs are already scaling back, but there is always a buffer effect from when a change is started until we see that change on the street. They are trying to match the fab capacity to help limit job cuts if possible."
The price cuts were just the beginning. On Wednesday, Intel said it will close two assembly and test facilities -- one in Penang, Malaysia, and another in Cavite, Philippines. It said it would also stop production at two wafer production plants: Fab 20, an older 200mm plant in Hillsboro, Ore.; and D2, a facility in Santa Clara, Calif.
The changes will affect between 5,000 and 6,000 employees worldwide, Intel said. Not all those employees will lose their jobs, however, as Intel plans to offer some of them positions at other facilities, the company said.
Intel will gradually close the facilities between now and the end of 2009, it said. The closures are designed to "align [Intel's] manufacturing capacity to current market conditions," the company said.
Like many technology companies, Intel has been hit hard by the U.S. recession, which also has affected the global economy. For its fourth quarter, which ended Dec. 27, 2008, Intel's profit plunged 90% from a year earlier, falling short of Wall Street estimates.
Intel's layoffs and plant closures follow even larger restructuring at AMD. The chip maker said in the fall it would spin off its chip-making facilities and focus on chip design. On Monday, AMD announced it would cut 1,100 jobs, or 9% of its workforce.
Both layoff announcements follow data last week that showed big trouble in the PC market. Worldwide shipments of PCs in the key fourth quarter fell 0.4% year over year, according to IDC. PC shipments in the U.S. actually fell 3.5% year over year in the fourth quarter.
Cautious consumers dragged revenue figures down even more. Fourth-quarter revenue fell up to 20% year over year, the worst drop-off since mid-2001, said Gartner Inc.
- Microsoft to cut 5,000 jobs as profits fall
- Ballmer: Microsoft strained to minimize layoffs
- Frankly Speaking: For Microsoft, the pain is just beginning
- Microsoft layoffs could boost Seattle's tech industry in long run
- Sun trims 1,300 jobs; IBM layoffs start
- Intel to shut four plants, lay off 6,000
- Lenovo to lay off 2,500 staff, cut management pay
- Ericsson profit declines, plans to cut 5,000 jobs
- AMD to cut 1,100 jobs and slash salaries across company
- 15 Non-Certified IT Skills Growing in Demand
- How 19 Tech Titans Target Healthcare
- Twitter Suffering From Growing Pains (and Facebook Comparisons)
- Agile Comes to Data Integration
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
- Pay-as-you-Grow Data Protection: IBM Tivoli's Full-featured Data Protection Suite for Small to Medium Businesses IBM Tivoli Storage Manager Suite for Unified Recovery gives small and medium businesses the opportunity to start out with only the individual solutions...
- Streamline Data Protection with IBM Tivoli Storage Manager Operations Center IBM Tivoli Storage Manager (TSM) has been an industry-standard data protection solution for two decades. But, where most competitors focus exclusively on Backup...
- Simplify and Consolidate Data Protection for Better Business Results Learn about IBM® Tivoli® Storage Manager Operations Center, which provides advanced visualization, built-in analytics and integrated workflow automation features that leapfrog traditional backup...
- HP HAVEn: See the big picture in Big Data HP HAVEn is the industry's first comprehensive, scalable, open, and secure platform for Big Data. Enterprises are drowning in a sea of data...
- Meg Whitman presents Unlocking IT with Big Data During this Web Event you will hear Meg Whitman, President and CEO, HP discuss HAVEn - the #1 Big Data platform, as well...
- The New Way to Work Knowledge Vault This Knowledge Vault focuses on how, in today's increasingly virtual world, it's more important than ever to engage deeply with employees, suppliers, partners,... All Processors White Papers | Webcasts