Intel tighten belts to beat recession

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Intel is shutting down four manufacturing plants after weak PC sales.

Intel Corporation, one of the world’s foremost CPU manufacturers, is following in the footsteps of IT giant Microsoft, by severely cutting costs.

The first action the company took was to slash product prices, while the follow-up action was announced last month to close four manufacturing plants, which could mean the loss of up to 6,000 jobs.

The increase of popularity of the netbook, which consumers seem to favour due to its lower entry-level price, as well as rival company AMD Inc.’s new range of CPUs play a part in the company’s decisions.

Some of Intel’s high-end desktop chips were cut by as much as 40 per cent, a decision made to stimulate “demand to consume inventory”, said analyst at In-Stat, Ian Lao.

Mr Lao said: “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 decision to close down four plants will take place gradually, to adjust manufacturing capacity to current market circumstances, says the company.

The four plants include assemble and test facilities in Cavite in the Philippines, as well as in Penang, Malaysia. Two wafer production plants, one in Santa Clara, California, the other in Hillsboro, Oregon, will also be brought to a stop.

The U.S. recession is hitting many companies hard, and PC giants such as Intel are not immune. December 2008 revealed that the company’s profit fell a huge 90 per cent over the period of a year.

Intel’s rivals AMD also announced a cut of 1,100 jobs, or up to nine per cent of its workers. These announcements, coupled with Microsoft’s decision to lay people off and cut costs, indicates a period of difficulty for the PC market.