Intel Moves to Reduce Costs in Wake of Slump : Will Lay Off 950, Close Plant in Santa Clara

Associated Press

About 950 layoffs, seven unpaid days off and other cost-cutting measures were announced Wednesday by Intel Corp., the latest victim of the slumping semiconductor industry.

“This is the most severe shakeout in our industry in over a decade,” Intel Chairman and Chief Executive Gordon E. Moore said. “We continue to receive a low rate of incoming orders from our customers, requiring us to adopt the actions announced today.”

The steps included a suspension of merit pay reviews for the company’s 24,200 workers until the first quarter of 1986 and the closure of Intel’s oldest plant, a wafer fabrication facility here that employs less than 100 people.

Moore said the measures will keep Intel’s work force as “intact as possible.”


The company, which produces memory and microprocessor components and systems, will lay off 700 employees on July 2 with the remainder leaving “throughout the year,” company spokeswoman Glynnis Kaye said.

The days off without pay will be selected on an “operation by operation” basis, Kaye said. “Some of those facilities will close down for a certain period of time,” she said.

No Layoffs Overseas

The layoffs will affect 4% of Intel’s work force, which includes 15,200 workers in the United States. Intel has large operations in Oregon, Texas, Arizona and New Mexico. Kaye said all domestic integrated circuit facilities and support groups will be affected.


There will be no layoffs at major overseas operations in Malaysia, the Philippines and Puerto Rico, according to Kaye.

Kaye said the factors leading to the cuts included “aggressive pricing by the Japanese in particular and decreasing prices for older commodity products.” She said there were “absolutely no plans” for further cutbacks.

Intel reported net income of $10.8 million on net revenue of $375.2 million for the quarter ended March 30. That compared to net income of $50.3 million on net revenue of $371.6 million in the same quarter last year.

The move is the latest in a recent wave of layoffs or cutbacks affecting Silicon Valley.


Apple Computer announced June 14 that it would lay off 1,200 workers and close three plants, and Advanced Micro Devices is putting workers on a four-day week during July. National Semiconductor laid off 1,300 workers earlier this month, including 600 in the Silicon Valley.

Burroughs Corp. has reported that it plans to close a plant in Santa Clara, Verbatim Corp. will reduce its staff by 200 workers by August and another 45 jobs are to be cut at Scientific Micro Systems.