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Intel Closes Another Factory And Cuts Jobs

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Intel’s restructuring continues as it closes a chip plant in South America with a loss of 1,500 jobs

Intel continues its global restructuring plans after it promised in January to cut 5,000 jobs in order to focus new markets like mobility, cloud computing and the Internet of things.

And it seems that at least 1,500 of those job losses will reportedly will come from the South American country of Costa Rica.

Plant Closure

Intel has said it is closing an assembly-and-test facility in the Central American country, part of a larger move to consolidate such work at plants in China, Malaysia and Vietnam, according to company spokesman Chuck Mulloy.

The closing of the factory, established in 1997, will still leave more than 1,000 Intel employees – including engineers, finance and human resources workers – in Costa Rica, and the chip maker is hoping to add another 200, Mulloy told Reuters.

Intel-LogoThe plant closing is coming at a sensitive time for the country, which on 6 April elected a new government. According to Reuters, Costa Rica President-Elect Luis Guillermo Solis was assured by Intel executives during a meeting 8 April that the decision to close the factory was not influenced by the country’s politics.

“The decision bears no relation to the election of the new Costa Rica government or the market conditions for … potential foreign investment,” a statement from Solis’ office stated.

Still, the country is taking a hit. Soon after Intel said it was closing the factory and cutting 1,500 jobs, Bank of America said it was shuttering operations in several countries, including Costa Rica, costing the country another 1,500 jobs.

For Intel, the closing of the Costa Rica plant and the consolidation of operations in Asia is part of a larger effort to pare costs and become more efficient. Intel was caught flat-footed several years ago when the mobile device market – particularly smartphones and, later, tablets – started to skyrocket and global PC sales began to slow.

Company Transition

Now Intel is working to reduce its reliance on the PC space while trying to expand its reach in the mobile device market. At the same time, the company is moving aggressively into a range of other burgeoning areas, such as the Internet of things, wearable devices, big data and cloud computing.

Intel in 2013 saw its revenues fall 1 percent, to $52.7 billion (£31.3bn), over 2012, and income decrease 13 percent, to $9.6 billion (£5.7bn). In January, Intel executives said revenues in the first quarter of 2014 will be about $12.8 billion (£7.6bn), with revenues for the whole year being flat.

Intel is scheduled to release its first-quarter financial numbers 15 April.

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Originally published on eWeek.