Intel to Shut Four Plants, Lay off 6,000

By Eric Lai, Jan 22, 2009

Amidst a bevy of bad news in the PC market, Intel Corp. took two corrective steps this week, aggressively slashing prices on chips on Monday and announcing Wednesday that it would close four chip plants and cut as many as 6,000 jobs. Analysts laid the blame for Intel's actions on weak PC sales combined with tight-fisted consumers choosing low-cost models such as netbooks. They also said impressive new CPUs from rival Advanced Micro Devices Inc. were a factor. Monday's CPU price cuts by Intel , as much as 40% on some high-end desktop chips, were aimed at "stimulating demand to consume [chip] inventory," said Ian Lao, an analyst with In-Stat . "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 price cuts were just the beginning. On Wednesday, Intel said it would close close two assembly and test facilities -- one in Penang, Malaysia, and another in Cavite, the Philippines. It said it would also stop production at two wafer-production plants: Fab 20, an older 200mm wafer fabrication plant in Hillsboro, Oregon; and D2, a facility in Santa Clara, California.

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