But firm says plant remains ‘vital’ to its manufacturing network
Intel Corp. in Rio Rancho is reducing its 3,300 workforce by 400 people, but the company says its New Mexico facility remains critical to Intel’s global operations and the plant here is still in the running for future investments.
“This isn’t the beginning of the end,” Intel spokeswoman Natasha Martell Jackson told the Journal. “Intel in New Mexico is still a very vital part of Intel’s manufacturing network. It’s still producing some of the most popular products on the market with state-of-the-art technology.”
The decision to “redeploy” 400 employees in New Mexico reflects the Santa Clara, Ca.-based chipmaker’s efforts to restructure operations across the board to stay competitive as markets move away from personal computers, which Intel has long dominated, to mobile devices such as smartphones and tablets.
“It’s a dynamic market that’s shifting from PCs to mobile and ultramobile computing,” Martell Jackson said. “We’re aligning our resources and business priorities. That’s why we’re making these decisions at this point.”
Martell Jackson said no individual workers have yet been notified about changes in their employment status, because the “deployment” process will begin with a company offer for workers in Rio Rancho to voluntarily seek positions at other Intel locations, opt for retirement if they qualify, or accept an “attractive” separation package.
“Once we’ve gone through that process, if we haven’t reached the 400 head count, then and only then would we start redeployment,” she said.
Redeployment refers to an Intel program in which employees continue receiving a salary for two months while they look for jobs either inside or outside the company with Intel assistance. After that, their employment at Intel is terminated.
The company has been struggling to catch up with competitors who make chips for mobile devices while managing a sharp decline in demand for PCs worldwide. Intel’s profits fell 27 percent in 2012, and in July, the company reported another 27 percent drop in net income.
In fact, on Thursday, Intel announced it will shut down a chipmaking plant in Hudson, Mass., laying off 700 people by year-end.
But Martell Jackson said the circumstances at the Hudson and Rio Rancho plants are very different, because the Massachusetts facility was still making chips on 200 millimeter (8 inch) wafers, which is Intel’s oldest technology.
In contrast, Intel overhauled the Rio Rancho facility more than a decade ago to manufacture chips on 300 millimeter (12 inch) wafers, which remain the standard in the chipmaking industry today.
On the other hand, Rio Rancho continues to make chips with 32-nanometer transistors. In that regard, the plant is two generations behind the curve, since Intel is already producing 22-nanometer chips at other factories, and the company is building manufacturing capacity for 14-nanometer chips at plants in Arizona and Ireland.
The company continually strives to reduce transistor size to cram more of them on each chip to increase computer processing power.
The Rio Rancho plant was passed over in the company’s last two rounds of investment to upgrade facilities to 22- and 14-nanometer chips.
And the plant’s long-term stability may depend on whether it gets selected for new upgrades as the company moves to 10-nanometer and 7-nanometer chips in the next few years, said Ken Dulaney, vice president with technology research firm Gartner Inc., who closely follows Intel.
“The company is getting off 32 nanometers,” Dulaney said. “Mainstream now will be 22 and 14 nanometers.”
Martell Jackson wouldn’t say whether those factors influenced the decision to downsize at Rio Rancho. But she said New Mexico remains in the running for investments to upgrade to 10-nanometer chips and beyond.
“Intel still hasn’t announced plans for its next technology investment,” she said. “The company constantly evaluates all sites for future investment, so we continue to pre-position (our) site to ensure it’s ready, and we haven’t stopped those efforts.”
Local officials say they believe the downsizing in Rio Rancho is, indeed, part of a global company effort to restructure operations to remain competitive as the chip markets evolve, and it may have little bearing on Intel’s future in New Mexico.
“This is an effort on Intel’s part nationally to start to downsize some facilities, and Rio Rancho is one of them,” said Rio Rancho Mayor Thomas Swisstack. “We’re seeing this happen in other places throughout the country, but as it relates to us, I don’t think or believe that this reduction is any indication that Intel will be pulling back from New Mexico.”
Albuquerque’s Economic Development Director John Garcia cautioned against overreacting.
“This reflects the ebb and flow of markets and economic conditions,” he said. “We don’t want to overreact to some downsizing or adjustments, because manufacturers constantly make these kinds of business decisions to keep pace with changing economic conditions. I’m confident we have a great plant here that remains strategic for Intel.”
“We realize it’s a difficult time for our employees and the community,” Martell Jackson said. “Our intent is to provide employees with the support and assistance they need.”
Gov. Susana Martinez issued a statement that the state will use all appropriate resources to help the employees find work.
“We will also work hard to strengthen our manufacturing sectors, which helps Intel,” she said, “but also helps other companies like those coming to the Santa Teresa border area, and our overall manufacturing base.”