New York, July 3: Chip giant Intel Corp on Thursday confirmed it is shutting down two of its manufacturing plants for nine days beginning this weekend to curb costs. The company is also beginning a previously announced voluntary separation program in an effort to reduce its overall work force by 3,000 employees. A report published Wednesday by CNET's News said the plant closures will affect 1,700 workers and allow Intel (INTC) to reduce a backlog in chip supplies. The news follows an announcement in April when executives said the chip maker was working on initiatives to address its inventory problems.Intel is closing two plants in Oregon from July 4 to July 12. Intel spokesman Chuck Mulloy emphasised that such temporary closures, known as "warm downs" in the industry, are common - but Intel does not normally announce them.
Mulloy said employees affected by the temporary shutdowns in Oregon will be able to use accrued vacation and holiday time if they choose. Intel is also instituting a voluntaryseparation program aimed at reducing its work force. The layoffs are a follow through of plans announced in April. At that time, Intel said it was cutting 3,000 jobs, or 5 percent of its work force, by the fall. At that time, Intel said most of the cuts would come through attrition rather than layoffs. The company is now offering severance packages to make those cuts.
Mulloy said Intel executives are in the process of determining which facilities will be affected by the previously announced lay-offs.
He said it could affect employees at a variety of plants, including Fabs 5 and 15 in Oregon. "We said [earlier] that it would be done primarily through attrition, some redeployment and possibly localised layoffs. This voluntary separation program that's under consideration is a tool to achieve that number. We haven't moved the number beyond 3,000," Mulloy said. The chip giant has been struggling financially since pricing pressures in the computer industry have forced it to offer chips for sub-$1,000 PCs.Chris Chaney, an analyst at A.G. Edwards, said while he isn't surprised at the news of the shutdowns, it is a sign that industry conditions are worse than Intel has let on. "I think it's an indication that the industry is in a bigger downturn than people had thought," he said.
"A lot of people are looking for Intel's third quarter to be sequentially higher than the second, but I don't think it's going to be that much better." Chaney said, however, the shutdowns probably won't affect Intel's dealings wit suppliers. "They probably have about 14 days of supply backed up," he said.
"The shutdown isn't long enough to make that big of a difference." Intel (INTC) shares were down 1-7/16 to 73-3/4 just before the closing bell.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
