Intel cuts to affect up to 6,000 workers

Chipmaker to cut production at 2 U.S. plants, shut 3 facilities in Asia.

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By Kenneth Musante, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Chipmaker Intel Corp. announced Wednesday that it will be cutting production at two U.S. silicon wafer facilities and closing three facilities in Asia, affecting between 5,000 and 6,000 workers.

Intel, in a news release, said some of the workers could be offered positions at other facilities.

"The fact that they're taking action rather quickly to rightsize production" is encouraging, said Doug Freedman, analyst at research firm Broadpoint AmTech.

Intel, like other chipmakers, needs to scale production to a level that matches demand, according to Freedman.

The No. 1 maker of microprocessors said production will be halted at the Fab 20 facility in Hillsboro, Ore., and the D2 facility in Santa Clara, Calif.

Operations are being shut at two facilities in Penang, Malaysia, and a third in Cavite, Philippines.

The plant shutdowns are slated to occur between now and the end of the year, according to Intel.

The company said the reduction in manufacturing capacity will not affect the production of its new 45-nanometer and 32-nanometer chips.

Last week Intel posted a 90% decline in fourth-quarter earnings, as demand for computer components declined through the last part of 2008. Because of the uncertain economic climate, the company refused to offer any guidance for what the first quarter will bring.

However, Intel did say that profit margins would perk back up to normal levels by the second half of the year, even though capital spending would be relatively flat, or even recede in 2009.

"When the economy gets a headache, we (the tech industry) get the flu," said Freedman.

Intel is widely viewed as a proxy for the health of the overall PC industry, since its products are a key component for most computer manufacturers.

Shares of Intel (INTC, Fortune 500) rose 1.13% to $13.41 a share in after-hours trading. To top of page

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