Intel likely to move fab to Cabuyao, Laguna

When the rumor that Intel Philippines was facing an impending closure in April this year, the company corrected this — saying that it’s weighing its options and could transfer its plant somewhere else. June has past and Intel officials have not released anything. I’ve sent out interview questions in the hopes of getting some updates.

For the meantime, here’s what a contact of a friend told me about Intel’s colorful past and possible future in the Philippines.

• Several locations have been considered but the NXP Semiconductors (formerly Philips Semiconductors) plant in Cabuyao, Laguna is the most likely candidate. NXP laid-off over 400 workers back in March 2007 from their Cabuyao plant and moved about 200 employees to their newer Calamba station. Intel could be buying/leasing this Cabuyao plant from NXP.
• Attrition rate is somewhere between 7-10% in the Cavite plant and management has put hiring on hold. Employee count plateaued at a high of 6,500 to a current low of around 1,500. This is partly due to the Flash division spunned off (now Numonyx, founded March 31, 2008 by Intel Corporation, STMicroelectronics and Francisco Partners) and some engineers moving over to the new company.
• Severance packages were offered but still uncertain. The least Intel Philippines could offer is 3 months salary, based on previous severance packages it offered.
• Hardware/CPU pilferage is a normal occurrence not unique to Intel. Almost all plants suffer the same fate — Cypress, Maxim, Fujitsu, Hitachi — it just happens (only in the Philippines?).
• The Merom (Core 2 for laptops) and Penryn (mobileCore 2 Duo) chips were manufactured out of the Cavite plant. Since both are based on the 45 nm process, it’s unlikely this fab will be phased out.
• Ever since the move from the Makati plant to the Cavite plant, only a foreigner holds the position of General Manager. This was due to a management issue that led Intel into far-flung Trece Martires instead of the Laguna Technopark.

Let’s face it, it’s now cheaper to operate a plant in Malaysia, Vietnam and China than in the Philippines – high cost of fuel, high inflation rates, high power rates and not so cheap labor cost. Besides, exemption from corporate income tax is only up to eight years for companies operating in special economic zones like the Laguna Technopark.