Updated at 3:00 p.m. PST with comments from an Intel spokesperson.
Intel said on Wednesday it will close chip plants to align its manufacturing capacity to current market conditions. Between 5,000 and 6,000 employees will be affected.
The world's largest chipmaker will halt production at five "older" factories.
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., Intel said. Additionally, wafer production operations will end at the D2 facility in Santa Clara, Calif., the company said.
"The actions at the four sites, when combined with associated support functions, are expected to affect between 5,000 and 6,000 employees worldwide," Intel said in a statement. "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."
Intel said it will consolidate and streamline some older capacity without impacting the deployment of new, leading-edge 45-nanometer and 32-nanometer manufacturing capacity.
Intel spokesperson Chuck Mulloy, in a phone interview, said this move is connected to what the company said in its earnings conference call last week when chief financial officer Stacy Smith said that Intel would aggressively reduce factory utilization levels in order to avoid oversupply.
"During the normal course of events it's a long-term planning process to take the older capacity offline. And all of these factories are on a roadmap to be rolled out of the network at some point. But the financial decline that we're facing today accelerated that process," he said.
Advanced Micro Devices chip plant spin-off rumors won't die. Probably because they may be partially--or more than partially--true.
AMD Dresden facility to be spun off?
(Credit: AMD)But the timing is the big unknown. AMD claims the launch of its so-called Asset Smart strategy is not imminent.
The latest rumor was triggered by a blog at the Austin American Statesman that said AMD may "spin-off of its manufacturing operations within two weeks." The blog cites a Wall Street securities analyst, John Lau with Jefferies & Co.
AMD said that's not so. "We hope to get it done by the end of the year. There's been no change on our end," said Drew Prairie, an AMD spokesman.
"I wouldn't expect an urgent phone call from me in the next two weeks," he said, implying that the timing would not be in this time frame.
AMD has two chip factories in Dresden, Germany, that are at the center of the spin-off speculation.
Prairie also cautioned that speculation about the structuring of the spin-off may not be accurate. "I wouldn't take that assumption from (analysts) as definitive. There's a lot of nuances and gray areas, as to what we're going to be doing. A lot the speculation is painting things as black and white. I don't think, come announcement day, it will be that black and white."
He also reiterated that the proposed chip plant in upstate New York "would be a critical part of our manufacturing."
Analysts have also speculated that AMD may receive funding along the lines of the $622 million investment AMD received from Mubadala Development Co., the investment arm of the Abu Dhabi government.
IBM may play a small role in the Asset Smart strategy also. Currently, AMD and IBM do joint research and development on next-generation chip technology in a location close to the proposed AMD chip facility in Malta, N.Y.
IBM is cutting pay for workers at chip manufacturing plants in New York and Vermont. This comes on the heels of job cuts at the Vermont facility.
IBM chip manufacturing facility
(Credit: IBM)Some shift workers at IBM's semiconductor plant in Essex Junction, Vt., will see net pay reductions of up to 10 percent in early 2009, said Jeff Couture, an IBM spokesperson.
In effect, a 20 percent premium for shift workers is being eliminated, according to Couture. To mitigate employee earnings losses, IBM is making a one-time base pay increase, he added. However, even with this increase, the "net for employees will range from no impact to a maximum of 10 percent (pay cut)," he said.
The report first appeared in the Burlington Free Press.
Overall, pay cuts would affect about 3,500 workers at plants in Poughkeepsie and East Fishkill, N.Y., as well as Essex Junction, Couture said.
Though revenue from IBM's Systems and Technology segment totaled $5.2 billion in the second quarter, up 2 percent year over year, revenue from "microelectronics OEM" (which is within the Systems and Technology group and includes chipmaking-related operations)--decreased 19 percent, according to the IBM 2008 second-quarter earnings report.
One aspect--not surprisingly--of the pay-cut move "is to reduce costs," Couture said. The other imperative is to remain competitive with rivals that don't pay the kind of premiums that IBM is paying.
IBM competes worldwide with companies like Taiwan Semiconductor Manufacturing Company (TSMC) and Chartered Semiconductor.
The Essex Junction facility is a contract manufacturing operation that builds chips that go into cell phones, DVD players, TVs, and other consumer electronics devices, Couture said. East Fishkill, on the other hand, builds the specialized processors that go into Sony's PlayStation, Microsoft's Xbox, and the Nintendo Wii, among other products.
Earlier this year, IBM announced 180 job cuts at the Essex Junction plant, reducing the employee count to about 5,400.
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