Intel Shuts Plants For 10 Days To Reduce Inventory

Computergram International, July 6, 1998

Intel Corp, in a move that illustrates the overall state of the semiconductor industry, is temporarily shutting down two chip- making plants to cut costs. The company will be closing its two older-generation Fab 5 and Fab 15 wafer fabs in Hillsboro, Oregon and sending many of the 1,700 workers home for eight days without pay.

A spokesperson explained that the employees could take personal or vacation time if they want to be paid for the period. He also said the "warm-down," as the temporary shut downs are referred to, was being done simply to adjust inventory of older products as it ramps up the newer ones that are the "bread and butter" of the company's business. The move comes in the same week that Intel is introducing its "voluntary separation" program designed to reduce its work force by 3,000, as it announced in April (CI No 3,389). At the time Intel said the staff reduction was to be effected largely through attrition, and it's now working on severance packages that it will offer to employees. Many analysts feel the company will have to shed more than just 3,000 of its now 65,000 jobs to remain financially virile, but the company insists it is sticking by that number. Intel has predicted that second quarter revenues would be flat compared with its first quarter, with profit margins down.