RPT-UPDATE 1-Intel says to shift 2,000 jobs out of Shanghai

Thu Feb 5, 2009 3:47am EST

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(Updates with comments, details)

*Will close Shanghai assembly and testing facility

*Shifts 2,000 jobs out of Shanghai

*Affected employees offered jobs in other parts of China

By Kirby Chien

BEIJING, Feb 5 (Reuters) - Intel Corp (INTC.O) announced on Thursday a reorganisation of its China operations that would close a Shanghai plant and eliminate 2,000 jobs, while affected workers would be offered positions in other parts of the country.

The news comes just days after the world's largest chipmaker said it would close plants in Malaysia, the Philippines and the U.S., cutting as many as 6,000 jobs as quarterly profit tumbled 90 percent.

"In order to optimize its manufacturing resources in China, Intel plans to consolidate Assembly and Test operations (ATM) from Pudong to Chengdu over the next 12 months," the company said in a statement.

Intel said it would provide the affected employees an option to work at the Chengdu facility in the west, or Dalian in the north, both more than 1,000 kilometres from Shanghai.

"The decision to relocate is up to the employees," said Nancy Zhang, an Intel spokesperson in Beijing. Zhang said she was not aware of any subsidies or other incentives that employees who choose to relocate would receive.

An Intel employee who attended the meeting in Shanghai where Brain Krzanich, president of Intel's Manufacturing and Supply Chain group, announced the job losses said workers were upset about the need to move to keep their jobs.

Intel said it was committed to China, nevertheless, and would increase its registered capital in Intel China Ltd., the company's investment holding company based in Shanghai, by $110 million.

Intel said the moves were necessary "as a result of the current economic conditions" and that its investment in the new $2.5 billion Dalian factory would be increased in order to insure that it has the latest advanced chip technology.

After Intel's assembly and test facility is closed in Shanghai, the eastern port city will still be home to an Intel research and development centre and the firm's China headquarters.

($=6.84 yuan) (Additional reporting by Michael Wei in Beijing and Alfred Cang in Shanghai; Editing by Ken Wills)

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