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Intel Cuts Capacity

Posted by: Cliff Edwards on January 21, 2009

You know it’s bad in the chip industry when giant Intel cries uncle.

The Santa Clara (Calif.)chipmaker announced Jan. 21 that it would be shuttering five older manufacturing plants to “align capacity to current market conditions.”

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. Additionally, wafer production operations will end at the D2 facility in Santa Clara, Calif.

Intel says some of the 5,000 employees at the plants will lose their jobs by the end of 2009, though some will be reassigned.

The news comes as Intel is slashing prices on its fastest quad-core processors, up to 40 percent, to compete with rival Advanced Micro Devices, which is moving to take share in the high-end gaming market with well-received lower-priced quad-core chips called Phenom.

The entire semiconductor industry is reeling from a double-whammy of overcapacity and slumping demand. AMD a day earlier announced it was selling its cellular chip business to Qualcomm. AMnd the smaller chipmaker announced plans recently to shed 1,000 more jobs, in addition to hundreds lost recently and slash salaries across the board.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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