Intel plans to cut 400 jobs locally

January 21, 2009 12:00:00 AM PST
The world's largest chip maker is slashing 6,000 jobs since demand has slowed for Intel's products. So one of Silicon Valley's leading tech companies is closing plants in Asia and cutting production in Santa Clara.

At Intel's Santa Clara headquarters, the reality for those leaving the D2 Fab manufacturing plant sets in during the drive home.

"First, I take some time off, then I look for a job," said Joseph Fu, an Intel plant worker.

All 400 jobs in the Santa Clara chip casing plant will be eliminated in June. The work will be absorbed by other Intel sites worldwide.

Intel reps say the Santa Clara plant will not close, but it will go into "hibernation mode," which means it'll be cleaned and emptied out and nothing will be produced here. However, they hope at some point, it'll re-open and be used in some capacity

"There are ebbs and flows in the tech industry and we're trying to position ourselves now for what's happening now and to be in a better position for when the economic conditions improve," said Mark Pettinger, an Intel spokesperson.

Still, the chip maker reported a 23-percent drop in sales and a 90-percent decline in fourth quarter earnings in 2008.

"Intel is the bell weather for the segment. When Intel does something like this, everybody else has to follow," said Rob Enderle, a technology analyst from the Enderle Group.

Enderle, says Intel's downsizing decision is the right one, considering the circumstances of the sector. Intel's biggest rival, Advanced Micro Devices, just announced its third round of layoffs in 12 months. It, like Intel, is struggling to return to profitability.

"What you're seeing is pretty much the entire industry and the entire tech industry adjust itself for what's going to be a tough couple of years," said Enderle.

It's been challenging couple of months for Intel employees who were told last June, their jobs were secure for another year.

As of Wednesday, casing production will stop here and those workers will be given the option of a severance package or a transfer to another plant.