Intel Corp, the world’s leading chipmaker, said it will shut down a factory in Shanghai and move it to a different location in China in an effort to cut costs amidst slumping sales and low demand.
In a statement, Intel spokesman said that the move will affect more than 2,000 Chinese workers. Meanwhile, the company said that most of its employees will just be transferred to another location where the cost of operation is lower compared to Shanghai.
The chipmaker also said that the factory will be transferred to the western city of Chengdu as this place will allow the company to cut expenses since the cost of operation in this location is not as high compared to other main cities in China.
According to an analyst, Intel’s move is a reflection of the gloomy economic condition most countries are experiencing nowadays, adding that high-cost cities will continue to lose large businesses as these will move to cheaper places to cope with the ongoing financial crisis.
Last month, the chipmaker shut down factories in Philippines, Malaysia, and US, affecting nearly 6000 employees.
Few weeks ago, the company also released its fourth-quarter sales which declined to 90 percent, or $234 million loss. The chipmaker said that drastic sales decline was caused by plummeting sales and low market-to-market transaction.
Earlier, economists warned that semiconductor industry will be the most affected sectors, adding that companies will continue to adopt various contingency measures to cut costs including massive layoffs, executive pay limit, postponement of building new factories and plants, reduced output to lessen the surplus, and workers’ time reduction.
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