Intel has slashed production at its chip manufacturing complex at Leixlip, Co Kildare, by 25% — ahead of this week’s announcement on layoffs at the Irish operation, which employs 4,500 people.
The company had ramped up production at its Irish plants to 10,000 “wafer starts” a week — the first step in the chip-making process — but has scaled it back to 7,500 a week, according to sources. The slowdown has raised fears that the factories are seen as overstaffed and may be targeted for larger-scale cuts than previously feared.
The US company, regarded as a key overseas investor in Ireland, said on April 19 that it would cut 12,000 jobs worldwide, or about 11% of its total workforce. Irish workers were told last week that the Leixlip plant would be affected by the restructuring, described by Intel as ACT — “accelerating change and transformation”.
The layoffs are likely to run to at least several hundred people, sources said. In a memo to staff last Thursday, Eamonn Sinnott, the general manager at Intel Ireland, said staff would be told the extent of the cuts “within 72 hours from May 4”.
There are expected to be both voluntary and compulsory redundancies, and staff are likely to receive 6-7 weeks’ pay per year of service. Intel completely overhauled two of its Irish factories, Fab 14 and Fab 24, in recent years at a cost of about $5bn (€4.4bn).
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Industry sources said the company had been installing new equipment and hiring staff in recent months to run 10,000 wafer starts a week. That target was reached at the start of April but was almost immediately scaled back to 7,500, and is expected to stay at that level until at least the end of this year.
“Production is going down, and every area could be hit [by layoffs],” said one source. “We have the people needed for 10,000 [wafer starts] and 25% of that is gone.”
The main Irish plants are seen as being somewhat insulated, however, as they produce chips used in high-end servers and data centres rather than the slowing PC business. Announcing the restructuring on April 19, Intel chief executive Brian Krzanich said the data centre and “internet of things” businesses were the company’s “primary growth engines”, delivering 40% of its revenue in 2015 and the majority of its operating profit.
Krzanich said the 12,000 layoffs would come from “voluntary and involuntary departures, global site consolidation, and efficiency initiatives”. Intel expects the restructuring to cost $1.2bn, mainly related to redundancy payments and benefits.
Ireland was not specifically mentioned in the initial announcement, and it is understood workers at some of Intel’s US factories questioned why it appeared the Irish unit would not be hit. Layoffs have already started in the US, with Intel confirming last week that nearly 800 jobs would go in Oregon.
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It is expected to close a site in Washington state with 350 staff. There are also expected to be cuts at its operations in Israel and Asia, which are set up to produce the company’s most cutting-edge chips.
In his memo, Sinnott said the restructuring would be “a difficult process” for Intel Ireland staff. “Let’s continue to be mindful and take care of each other,” he said.