As part of its plan to trim its global workforce of 107,000 by
5% by the end of this year,
) recently slashed 1,500 jobs in Costa Rica. The layoffs will
occur over the next two financial quarters.
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Moreover, Intel announced the termination of all manufacturing
activities at the Costa Rican site, where both assembly and test
operations are carried out. Intel intends to shift these
operations to plants in China, Malaysia and Vietnam.
The Costa Rican Plant, established in 1997, originally had 2,500
employees consisting of engineers, business and human resources
staff. After the layoff, 1000 jobs will still exist and Intel
plans to generate 200 new positions.
Costa Rica got a double blow as The Bank of America ("BofA") also
announced the shutdown of its operations, which is also one of
the largest employers in this Central American country. The
closure of operations of these two leading companies will
negatively impact the country's gross domestic product ("GDP").
Intel, the largest manufacturer of chips, has been facing
problems due to the fall in sales of personal computers (PCs). In
its fiscal fourth-quarter 2013, Intel's net income was up 6% on
revenue growth of 3%. Even though net income and revenue rose,
worldwide sales of PCs fell 7%.
According to research firm Gartner, annual PC shipments declined
1.7% to 76.6 million units in the first quarter of 2014 on a year
over year basis. This is the eighth consecutive quarter of PC
Trimming its workforce by 5,000 by the end of 2014 is a part of
Intel's internal restructuring to combat losses due to the fall
in worldwide PC sales. Furthermore, it is trying to lower its
operating expenses and concentrate more on areas like mobile,
wearables and Internet of Things (IoT). These are emerging areas
within the technology space with companies like
) among others trying to build a position.
Currently, Intel holds a Zacks Rank #3 (Hold).