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Intel to cut 675 jobs

The chip giant will let 675 employees go from a Massachusetts plant it acquired from Digital.

Intel will let 675 employees go from a Massachusetts chip fabrication facility in a job cut that is separate from Intel's earlier stated goal of reducing its headcount by 3,000.

The employees work in a plant acquired from Digital Equipment earlier this year. The affected employees all work in manufacturing, according to Bill Calder, an Intel spokesman. Development and marketing departments will not be reduced.

Some of the job cuts will occur this year, but most of the reductions will occur in 1999, Calder said. Employees subject to the reduction will receive four months' worth of severance pay and other benefits.

Products made at the Hudson, Massachusetts, facility include the StrongArm processor, the Alpha processor, and networking products.

The company is looking to conform the operation of the plant to the cost structure that rules other Intel plants, he added. "We are implementing our cost model into that fab," said Calder. In the end, the facility will employ 900 to 1,000 manufacturing employees. It currently employs 1,600. It employed 1,800 when Intel first acquired it.

Technically, the job cuts do not count toward the 3,000 goal, but were never part of that calculation, he said. The 3,000 figure, which was announced in April after a weaker-than-expected first quarter, was tabulated with regard to Intel proper. Intel added 1,800 employees when it acquired the Digital facilities in May.

The cuts, however, will likely awaken the debate on whether Intel will go beyond its stated goal of cutting headcount by 3,000. In April, Intel said it would reduce its 65,000 person work force by slightly less than five percent.

Because business continued to be slow in the second quarter, some analysts speculated that Intel could raise the number to cut costs.

Since then, computer sales have grown, brightening Intel's outlook for the second half of the year. A number of analysts, such as Mark Edelstone of Morgan Stanley, have raised their earnings projections as a result of the uptick in sales. Some, however, have remained skeptical because of declining PC prices and slowing demand overseas.

Intel is an investor in CNET: The Computer Network.