Intel to close plants, up to 6,000 workers affected

Chipmaker will halt production at five "older" factories to align its manufacturing capacity to current market conditions.

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.

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