Intel prepares to close Philippine plant

Intel prepares to close Philippine plant

Summary: The first U.S. company to set up shop in the Philippines, Intel stuns employees and country with plans to shut down its manufacturing plant within the year.


PHILIPPINES--Intel is expected to shut its test and assembly plant in the country within the year, in a move that has stunned its employees and the local industry.

Top company officials informed local employees during a meeting Apr. 2 that the company was exploring "multiple options" for the manufacturing hub, one of which included plans to close the facility. They added that severance pay packages have already been arranged for the employees, should these plans fail to work out in the next six to nine months.

First set up in Makati City in 1974, the manufacturing plant was later moved to a bigger facility in General Trias, an industrial town where the biggest industry is semiconductor, in the province of Cavite, located just south of Manila.

In 2002, six years after the move, the Makati location was closed and Intel consolidated all its manufacturing functions including Flash memory design, to the Cavite facility, which currently employs about 3,000 employees.

The mills have been spinning

Rumors have been circulating since 2005 that Intel had already made a decision to pack up and leave the Philippines after the year 2010. The writing on the wall became clearer in 2006 when Intel inaugurated a US$605 million test and assembly plant in Ho Chin Minh City in Vietnam.
During the Vietnam launch, Intel Chairman Craig Barrett said the facility was simply an expansion and would not affect the operations of other plants located in countries such as the Philippines.
However, the telltale signs were obvious. Among the countries in Asia where it has test and assembly plants, the Philippines was the only site in which Intel made no significant plans to invest or expand.
Compared to the Cavite plant which received no part of Intel's US$1 billion investment plan for Asia in 2006, Intel poured a whopping US$270 million to increase the capacity of its Malaysian plants and another US$300 million to expand its facilities in Shanghai and Chengdu in China.
During the media interview, Barrett said the company considers "political stability" as a major factor when making investment decisions and singled out Vietnam as a favorable investment climate.

Intel was the first American semiconductor company to set up shop in the Philippines in 1974, and to date, the company has poured some US$1.5 billion worth on investment in the country. Intel chose the Philippines as the base of its second Asian offshore assembly operations center, after Malaysia.

According to Intel's local Web site, the Cavite assembly and testing facility provides "integrated circuits known as Flash memory, as well as microprocessors and chipsets that are marketed worldwide".

Impending move stuns employees
According to blog entries posted by current and former Intel employees here, staff present at the Apr. 2 meeting left in tears.

A brief statement from the company stated: "In an effort to keep employees informed, Intel has updated its employees that significant investments would be required to ensure the long-term viability of its factory building in Cavite." It did not explicitly disclose plans to shut down the manufacturing site.

However, an Intel representative said in a phone interview that offering exit package was the right thing to do since closing the plant is one of the options the company is exploring.

"We can't blame the employees if they feel [the offer of severance packages meant] that they're about to lose their jobs," said Teresa Pacis, external communications manager of Intel Technology Philippines, the manufacturing arm of Intel's local subsidiary.

"The company was just being honest with the workers when it announced the compensation package as Intel explores its options," Pacis told ZDNet Asia.

According to various blogs, Intel had discussed the possibility of moving the factory to an IT park in the neighboring province of Laguna because the current Cavite building is structurally unsound.

But employees dismissed this option, questioning the need to offer staff severance packages if the company had intended only to transfer to another location within the country.

Industry observers have cited high electricity and labor costs as two major reasons why Intel is planning an exit strategy. The Philippines has the second most expensive energy cost in Asia after Japan.

Intel's impending pullout is a huge blow to the Philippines, where the electronics market--which encompasses semiconductors--is the country's largest export earner.

The chipmaker's decision to put up a manufacturing hub was a symbolic vote of confidence that paved the way for other foreign companies such as Texas Instruments, to locate their operations in the country.

In fact, the current Cavite plant was where Intel's mobile processor Centrino was first assembled and shipped to the global market. Pentium 4 chips were also manufactured in the facility.

Aside from making chipsets and processors, the local site also houses a Flash memory design factory. However, employees who specialize in Flash are expected to move to Numonyx, a joint venture set up between Intel and STMicroelectronics.

In 2004, an Intel-commissioned study by University of Asia and the Pacific showed that the chipmaker's investments resulted in US$713 million in direct and indirect export contributions.

The report further noted that Intel accounted for 22 percent of exports in Cavite and was the largest employer in General Trias.

Melvin G. Calimag is a freelance IT writer based in the Philippines.

Topics: Hardware, Processors, Servers

Melvin G. Calimag

About Melvin G. Calimag

Melvin G. Calimag is currently the executive editor of an IT news website in the Philippines. Melvin has been covering the local IT beat for the last 13 years. He is currently a board member at the IT Journalists Association of the Philippines (CyberPress), and also serves as a charter member with the Philippine Science Journalists Association.

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  • Plagiarist!

    shame on this person. this story was copied from several news websites and blogs in the philippines. what is this guy doing as a freelance writer for your website?
  • Really?

    I'm the person who wrote this story. I'm an IT reporter based in the Philippines and I did attribute the comments I got from the blogs. I got the other details through my own contacts and previous stories on Intel. It was inappropriate for you to make that comment without verifying first your facts.
  • pseudo-plagiarist?

    wow, that was a fiery comment from mr anthony. however, i do have to point out that mr calimag's story came out day after several blogs have talked about it and a story from the inquirer in the philippines came out. it is most likely you took lead in these stories then followed it up. while it is not an entirely unethical process, it would be unwise to take credit for someone else's work, even if you did a few leg work of your own.

    at any rate, the intel workers will surely have a sad year. intel is a major manufacturing plant in the philippines and if they leave, could spell the doom for others. i do hope they reconsider.
  • Beg to disagree

    I'm not taking credit for somebody else's work. There was indeed an earlier report by, but also in businessworld, just in case you didn't see it. It was even reported by Yahoo News. But we, too, had a tip from a source inside Intel. My editor knew about it. The businessworld report didn't say there was an earlier report apparently because they have their own sources as well.
    Journalists each have our own sources, and that's the way it works in our line of work. Although the earlier reports have their own merits, the report that came out here expanded the scope and clarified the issues.
  • Hey Mr. Anthony

    It takes one to know one. I just hope the other Asian IT news website would realize that as well. God bless.
  • reporter or columnist?

    I can't help but notice that melvin Calimag is both a reporter AND a columnist for ZDNet. I'm not familiar with the media business in the philippines but isn't it somewhat unethical that a reporter should also serve as a columnist? First of all, a reporter has to be objective with the topics he or she covers while a columnist interprets these stories and adds a zest of subjective ideals. It doesn't take a rocket scientist to see that this kind of setup is somewhat questionable. ZDNet should look into its policies regarding freelance reporters and freelance columnists if it wants to remain a bastion of online truth and integrity. Reporters must be reporters while columnists should be, well, columnists.
  • Why reporters are also sometimes columnists

    Dear "Media Idiot",

    Thanks for your comment. It has always been, and still is, a common practice for reporters to also pen columns and opinion pieces. CNN's Christiane Amanpor, International Herald Tribune's Roger Cohen, the New York Times' Thomas Friedman and Toronto Star's India-born Haroon Siddiqui, were all journalists who also wrote commentaries at some point in their career. And most still do.

    Because of their close proximity to news sources and strong domain knowledge of the areas they cover, reporters are in a good position to write columns and express opinions that are based on a deep understanding of the issues at hand. These days, of course, opinion pieces can also come in the form of blogs.

    You are right on one point: news articles must remain objective and impartial, while columns/blogs can carry personal opinions. At ZDNet Asia, commentaries/blogs/opinion pieces are always clearly demarcated as such, so our readers know to treat them differently from news articles.

    Most importantly, we do not condone plagiarism. We take such allegations seriously and will not hesitate to take necessary actions to deal with such offences. However, while we strongly encourage readers to exchange feedback and provide personal insights on the issues discussed in our articles, we will not condone any personal attacks against our journalists and do not encourage feedback that adds no real value to the discussion.
  • Hao Siao

    That goes to show that Media "Mr. Anthony" Idiot is NOT a true journalist; only reason why he can't comprehend the profession. There's nothing wrong following up on a lead. Good stories can't stop with one article. Even the news wires copy leads; they just have to be resourceful enough to get another angle and what not. And that's journalism. Copying press releases, posting on his own blog site as if he wrote the story without attribution to anyone is Media "Mr. Anthony" Idiot's job.
  • just an opinion, not an insult

    Sorry, you got the wrong impression. I'm not Mr. Anthony. Neither am I a journalist, a columnist or a blogger. I'm a simple reader who happens to pass by and notice that there's something different so I beg your pardon but let me dispense of my own opinions.

    First of all, Ms Yu, correct me if I'm wrong, but isn't it that all of the journalists you mentioned became reporters first before they became columnists or started writing opinion pieces? True that they were on the field covering some of the best stories but none of them editorialized during their time as reporters. It was only when they rose up the ranks when they became opinion writers because they have the experience none could match. I may be wrong so pardon my ignorance.

    Second, as I reiterate I'm not a journalist, thus I'm not familiar with the media system. However, I've stated earlier that there could be questions with the certainty of material that a reporter/blogger/columnist delivers. A reporter is one who tells the public what is happening and lets them decide while a columnist analyzes the story and gives his or her opinion. And again, isn't it true that a media company is not beholden to the material written by a columnist while the reporter is subject to editorial regulation? Again, pardon my ignorance.

    Third, I don't think there's nothing wrong with getting lead stories from any publication. I mean I know CNN often gets the story first and everyone else follow but it doesn't mean that a journalist should continuously follow others. He or she may have to take lead at some point and avoid the pitfalls of just being second-rate. Citing the same names you mentioned (Amanpour, Cohen, Friedman) they had taken the long road to get the best stories until they got to where they are now. In a matter of speaking, will you or any publication allow reporters, freelance or not, to remain second-rate? It's a matter of making them the best in what they are.

    Fourth, and the least, I'm not attacking your company nor any of your employees (unlike Mr Anthony and this Ben Over who is attacking me). My first message stemmed from my own observation as well as my limited knowledge of the hallowed media institution.

    Fifth, can anyone tell me what in the world is "Hao Siao"? Mr Ben Over, mind you explaining it to me? At least I get to learn something good today, ey?
  • Correction

    I take exception about your insinuation about being "second-rate". It was ZDNetasia which first reported the story how the Philippines voted on the Open XML document format. That was a scoop. Enough said.
  • Umm, no...

    Sorry, I wasn't implying you're the second-rate, Mr. Calimag. I was responding to Ben Over's "following-up-on-a-lead" message.

    If I may use my daughter's retort: "That's not for you, duh."

    Just read your OXML story. Good one though.

    Ben Over, I'm still waiting for your definition of "Hao Siao." I'm pretty curious about it.