Intel: Staff cuts won't disrupt supply lines in AP

Local company representatives reiterate that layoffs lie in support functions. Move is unlikely to affect Intel's supply operations, says analyst.
Written by Jeanne Lim, Contributor

SINGAPORE--Intel's retrenchment plans are unlikely to affect the company's manufacturing operations in the Asia-Pacific region, despite reports that up to 2,000 Intel workers would be laid off in Malaysia alone.

Intel today confirmed plans to knock 10,500 employees off its payroll and bring down its global headcount down to 92,000 by the second quarter of 2007.

Malaysian newspaper The Star on Monday reported that between 1,000 and 2,000 of the 10,000 Intel employees employed in the country would be offered voluntary layoffs.

Intel has 32 various facilities worldwide including fabs, manufacturing and assembly and test plants. Sites in Asia are located in Shanghai, China; Kulim and Penang, Malaysia, and Cavite, the Philippines.

Asked to comment on the reported layoffs in Malaysia, an Intel spokesman based in Singapore would only confirm what Intel CEO Paul Otellini said in a press release announcing the latest move.

The spokesperson said: "Most of the job reductions in 2006 focus on reductions in management, marketing, information technology functions and the sale of businesses, which have previously been announced. Intel has not publicly shared any details related to layoffs at [its] overseas sites."

Rajnish Arora, enterprise server and workstation research director at IDC Asia-Pacific, noted that with the majority of the layoffs concentrated in support functions, the latest announcement "is not going to constrain Intel's supply line".

"I don’t think it will impact the [Asia-Pacific] market as such," Arora said. "Intel is not cutting critical manufacturing functions. [The layoffs] is to prepare themselves for a more competitive position [against rival AMD]."

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