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Intel to Cut 1,500 Jobs as It Shutters Costa Rica Plant

Intel Corp. is consolidating testing operations at three plants in Malaysia, Vietnam and China, said Chuck Mulloy, a company spokesman. Photographer: Kiyoshi Ota/Bloomberg
Intel Corp. is consolidating testing operations at three plants in Malaysia, Vietnam and China, said Chuck Mulloy, a company spokesman. Photographer: Kiyoshi Ota/Bloomberg

April 8 (Bloomberg) -- Intel Corp., the world’s largest computer-chip maker, is cutting 1,500 jobs as it closes an assembly and test site in Costa Rica that had served as a symbol of the Central American nation’s ties to the global economy.

Intel is consolidating testing operations at three plants in Malaysia, Vietnam and China, said Chuck Mulloy, a company spokesman. The chipmaker had 2,500 employees in Costa Rica before the job cuts, and will try to create 200 new positions, he said.

The Santa Clara, California-based company decided to establish a microprocessor plant in Costa Rica in 1997. The factory underscored the country’s efforts to position itself as a manufacturing hub rather than just an agricultural exporter, with access to the U.S. market as well as Asia and Europe.

“Intel marked a landmark in our national history, by putting Costa Rica on the map as a place of investment in the world,” said Foreign Trade Minister Anabel Gonzalez in a news conference today in Escazu, Costa Rica. “Today, Costa Rica doesn’t depend on one sector and one company, as we export close to 4,763 products to 153 different countries.”

Employment Gains

The move comes after Costa Rican President Laura Chinchilla, who steps down next month, made progress in reducing unemployment that peaked at 10.5 percent in the second quarter of 2013. Joblessness in the $45 billion economy has since fallen to 8.3 percent.

Intel, whose processors run more than 80 percent of personal computers shipped worldwide every year, chose to establish operations in Costa Rica after studying sites in Indonesia, Thailand, Brazil, Argentina, Chile and Mexico, according to a 2000 case study by Harvard University’s Center for International Development. The company’s $600 million investment at the time represented about 4.2 percent of gross domestic product. That prompted the company’s then-Vice President Bob Perlman to say Intel’s arrival was like “putting a whale in a swimming pool,” according to the study.

In 2013, about 21 percent of Costa Rica’s exports of goods came from Intel, according to investment promotion agency CINDE.

The company is seeking ways to pare costs as the PC market shrinks for a third straight year. Intel has been trying to compensate for declining revenue by getting products into other devices, such as tablets and smartphones.

Intel runs chip-production factories at three sites in the U.S., and in Ireland, Israel and China. Its assembly and test facilities, which are typically in countries with lower labor costs, support those main chip plants. The company has had manufacturing and research facilities in Costa Rica since 1997, according to the company’s website.

The chipmaker had 107,600 employees at the end of 2013.

To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net; Isabella Cota in San Jose, Costa Rica at icota@bloomberg.net

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net; Bill Faries at wfaries@bloomberg.net Bill Faries, Jillian Ward

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