Intel Corp to temporarily close units

New York, July 3: Chip giant Intel Corp on Thursday confirmed it is shutting down two of its manufacturing plants for nine days beginning th...

New York, July 3: Chip giant Intel Corp on Thursday confirmed it is shutting down two of its manufacturing plants for nine days beginning this weekend to curb costs. The company is also beginning a previously announced voluntary separation program in an effort to reduce its overall work force by 3,000 employees. A report published Wednesday by CNET8217;s News said the plant closures will affect 1,700 workers and allow Intel INTC to reduce a backlog in chip supplies. The news follows an announcement in April when executives said the chip maker was working on initiatives to address its inventory problems.

Intel is closing two plants in Oregon from July 4 to July 12. Intel spokesman Chuck Mulloy emphasised that such temporary closures, known as quot;warm downsquot; in the industry, are common 8211; but Intel does not normally announce them.

Mulloy said employees affected by the temporary shutdowns in Oregon will be able to use accrued vacation and holiday time if they choose. Intel is also instituting a voluntaryseparation program aimed at reducing its work force. The layoffs are a follow through of plans announced in April. At that time, Intel said it was cutting 3,000 jobs, or 5 percent of its work force, by the fall. At that time, Intel said most of the cuts would come through attrition rather than layoffs. The company is now offering severance packages to make those cuts.

Mulloy said Intel executives are in the process of determining which facilities will be affected by the previously announced lay-offs.

He said it could affect employees at a variety of plants, including Fabs 5 and 15 in Oregon. quot;We said earlier that it would be done primarily through attrition, some redeployment and possibly localised layoffs. This voluntary separation program that8217;s under consideration is a tool to achieve that number. We haven8217;t moved the number beyond 3,000,quot; Mulloy said. The chip giant has been struggling financially since pricing pressures in the computer industry have forced it to offer chips for sub-1,000 PCs.Chris Chaney, an analyst at A.G. Edwards, said while he isn8217;t surprised at the news of the shutdowns, it is a sign that industry conditions are worse than Intel has let on. quot;I think it8217;s an indication that the industry is in a bigger downturn than people had thought,quot; he said.

quot;A lot of people are looking for Intel8217;s third quarter to be sequentially higher than the second, but I don8217;t think it8217;s going to be that much better.quot; Chaney said, however, the shutdowns probably won8217;t affect Intel8217;s dealings wit suppliers. quot;They probably have about 14 days of supply backed up,quot; he said.

quot;The shutdown isn8217;t long enough to make that big of a difference.quot; Intel INTC shares were down 1-7/16 to 73-3/4 just before the closing bell.