Intel Corp. has declared that it would close manufacturing plants in Malaysia and the Philippines. The cost cutting measures would also involve bringing down the operations in the US.
All the three units are the "assembly test" facilities of the company. But a major cost cutting measure involves sacking 6000 employees of the company.
The decision to shut three units and cut on workforce succeeds the company's decision to slash prices on a number of processors. A week earlier the company had also reported a decline in its fourth quarter revenue due to the economic crisis.
Chip makers have to ensure that their factories are running at full throttle and paying back for the expenditure incurred on them. But the units that are just consuming the resources i. e. underutilized factories are cutting into Intel's margins. The move had to be initiated to strike a balance. Intel also clarified that the cuts wouldn't affect investment in factories specializing in 45-nanometer or 32-nanometer chips.
"It's not a surprise given that their first quarter is probably going to be challenging, and they're trying to do what they can to cut costs in places that make sense," said Taunya Sell, an analyst at Ragen Mackenzie, a division of Wells Fargo. (Supreet contributed to this report)