Hi Barry, I suppose this is old news by now, but just in case...
Article...FOCUS-Intel to cut back manufacturing for 10 days...
July 3, 1998
SAN FRANCISCO (Reuters) - Reuters : Intel Corp., the world's largest semiconductor company, will cut back on its manufacturing for about 10 days, beginning this holiday weekend, as part of its ongoing cost-cutting measures.
Intel, based in Santa Clara, Calif., said Thursday it will begin a so-called warm-down, or temporary suspension of production, at two chip assembly plants in the Aloha and Hillsboro, Ore., areas.
The chip maker added that most of the employees in those two fabrication facilities (fabs) will take 10 days off without pay. The two fabs are used to make older-generation chips.
About 1,700 employees work in the two plants, called Fab 5 and Fab 15. They were informed of the coming warm-down in early June, an Intel spokesman said.
Employees may also choose to take vacation days, or other paid holidays, in order to continue to be paid over that time, which is standard Intel policy.
It is not yet clear how many of the 1,700 employees will cease working during the 10-day period, because some staff are needed to keep the hefty semiconductor manufacturing equipment running. A warm-down will temporarily stop production of chips, but the machinery must be kept running, Intel said.
''This is a warm-down to reduce the inventory of older products,'' Intel spokesman Tom Waldrop said. ''You don't shut the plant down, you suspend production. You keep the plant idling so you can spool it back up without hesitation.''
The last time Intel said it had a plant warm-down was last December, at a flash memory plant in New Mexico.
The chipsets and microprocessors made at these two plants in Oregon use an older manufacturing process, Intel said.
Separately, Intel held a meeting for these 1,700 employees Wednesday to inform them of a ''voluntary separation'' program, which Intel plans to announce in a few weeks, as part of its previously announced plan in April to cut 3,000 jobs from its total worldwide work force of about 65,000.
''It is voluntary,'' the Intel spokesman said. ''It is one of the tools we may use to attain that 3,000 goal. We said we will achieve that goal primarily through attrition.''
Intel held the meeting with these staffers because of the possibility that most of them will be gone when the program is announced to the rest of the company, Intel said.
The news of a manufacturing cutback and an upcoming voluntary severance program, first reported on CNET's News.com, comes amid rumors circulating on Wall Street over the past few days that Intel may announce further job cuts, or even layoffs, in addition to the 3,000 already announced.
''I heard four questions today about layoffs,'' Drew Peck, a Cowen & Co. analyst, said late Wednesday. ''I'd be more shocked if it was not happening. ... When average selling prices (of processors) go from $300 to $100 that is just one of the things you have to look at. Now they have to justify every employee that they have. ... It would be the inevitable result of what's going on in the PC business.''
Intel has been under pressure from the relentless price cutting in the personal computer industry and it has, in recent months, stepped up the pace of price cuts for all its chips.
Also hurting Intel, as well as the entire semiconductor industry, is the current economic malaise in Asia. Recently, many semiconductor and semiconductor equipment makers have announced layoffs or early retirement packages, in efforts to cut costs and staff amid sluggish demand for chips.
''There has been pretty significant headcount growth at Intel over the past few years,'' Mark Edelstone, a Morgan Stanley Dean Witter analyst, said. ''You get into these environments and it's always good to look at what you have.''
Edelstone said that the revenue generated per employee has declined from its peak in 1996. In the first quarter of 1998, it was $370,000, down from $530,000 in fourth-quarter 1996.
If Intel were to announce additional job cuts or layoffs, analysts said they do not expect the company to make any such announcements until its second-quarter earnings on July 14.
Intel said in April that its second-quarter revenues to be flat with the first quarter and that its profit margins would be at a low for the year in the June quarter, a few percentage points below first-quarter margins of 54 percent of revenues.
The chip maker also at that time its job cut plans, the first time it has cut a large number of jobs since 1986 when it made its exit from the volatile memory business. REUTERS@
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Michael |
