Following weekend reports in the technology press claim that Intel Corp. (Nasdaq:INTC) will fire 10-20% of it workforce, amounting to 15,000-20,000 people, the ramifications of the news on Israel is now becoming apparent. The company is likely to fire hundreds of its 6,500 employees in Israel, and it may not stop there.
Raymond James Equity Capital Markets analyst Ashok Kumar believes that Intel will defer planned investments in new fabs, including those in Arizona and Kiryat Gat. Intel is due to complete construction of the Kiryat Gat fab by mid-2008. It is still unclear whether the company will still hire employees for the fab, which was the main reason for the government’s hundreds of millions of dollars in set-up grants to the company, in view of the cutbacks and lay-offs.
The cutbacks at Intel follow the serious deterioration in the company’s financial results and the competition against Advanced Micro Devices Inc. (NYSE:AMD) in the semiconductor market. Intel’s second quarter profit plummeted 57%, compared with the corresponding quarter of 2005, to $885 million, and its revenue fell 135 to $8 billion.
An announcement about the current wave of lay-offs is expected this week, probably after trading closes on Wall Street on Tuesday. (The US markets are closed tomorrow for Labor Day).
Published by Globes [online], Israel business news - www.globes.co.il - on September 3, 2006
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