Intel to keep Malaysia plants running

KUALA LUMPUR, Malaysia--A representative of Intel's Malaysia division denied reports the company plans to close plants in the country in the wake of ongoing cost-cutting measures and increasing investment in China.

The representative said the company is reducing its Malaysian work force, however, by offering an unspecified number of workers voluntary separation packages.

Intel has two Malaysian plants with a total of 8,000 employees, plus a sales office in Kuala Lumpur.

On September 25, Advanced Micro Devices announced plans to lay off 2,300 employees, or 15 percent of its work force, by the end of the second quarter of 2002, blaming the move on the sluggish technology market.

The Sunnyvale, Calif.-based chipmaker will also close two fabrication facilities in Austin, Texas, and streamline other operations to reduce costs. About 1,000 of the layoffs will come from the closing of the Austin plants. The rest will come from AMD's operations in Malaysia.

Computer maker Acer laid off about a third of its 2,300 Malaysian workers due to sluggish PC demand. It was the Taiwan company's first job cut in Malaysia since opening its manufacturing facility in Penang, Malaysia, in 1990.

Others such as Motorola and Malaysian chipmaker Unisem have also laid off about 20,000 workers in the first six months of the year. That number could rise to 90,000 by year end, the Malaysian Trade Union Congress warned.

Economic growth in Malaysia has been on the downslide, and economists predict that the slump will continue until the U.S. and Japanese economies recover, jump-starting demand for Malaysian semiconductors and other electronic components.

Intel has invested $1.8 billion in Malaysia since its inception here, Intel president and CEO Craig Barrett revealed during a site visit in August.

In September, the company said it will spend $302 million to expand its chip assembly and testing plant in Shanghai, China. The investment would be used to build a new production line for the validation, testing and assembly of Intel 845 chipsets for Pentium 4 processors, Intel said in a statement.

The Intel Malaysia representative declined to comment when asked if Intel plans to move either part or entire manufacturing operations from Malaysia to China.

China's imminent entry into the World Trade Organization could drastically change the way technology companies go to market with their products, analysts have warned, adding that in future, companies will move more manufacturing activities to the mainland to take advantage of cheaper labor.

Dell Computer, for instance, has already begun moving some of its production facilities from Malaysia to China, sparking fear in government circles that this could be the beginning of an exodus.

Staff writer Sreejit Pillai reported from Malaysia.