Recruiting in China

Intel is going to cease the operation of its factory in Pudong, Shanghai and transfer the production capacity to Chengdu or Dalian. Over 2000 employees may be moved to new positions. But Intel claimed that Shanghai office’s role in R&D and investment would be reinforced.

Intel will adjust its plan of production and operation in China, including three factories in Shanghai, Chengdu and Dalian. In the following 12 months, the company hopes to integrate the production capacity of Shanghai factory into the factory in Chengdu.

Intel explained that it did not intend to close the factory, but to optimize its manufacturing resources in China. The company’s production capacity will remain in China. And employees will not be dismissed, but will be offered to transfer to new positions instead.

But an Intel engineer who having worked in Intel’s Shanghai factory for more than three years said this was just same as dismissal, as it would be very inconvenient for many employees to move since they have been working in Shanghai for years and settled their families there. He himself has just got married and bought an apartment in Shanghai last year, and can’t move to other cities. He hopes the company to offer reasonable compensation according to the labor law. But Intel has not revealed how it is going to deal with this matter.

Even accepting job transfer, 2000 employees won’t be able to settle down immediately. Intel’s Dalian factory will be put into production in 2010 the earliest. One of the company’s equipment suppliers disclosed that the production of factory might be delayed by half year. As for the Chengdu factory, due to the global financial crisis, the capacity efficiency hasn’t increased much so that the demand for production expansion is also limited.

The Shanghai factory has been in operation for over 12 years, with a total investment of $539 million, including initial investment and additional investments. The company’s management has emphasized for many times that it would further increase its investment, and that the Shanghai factory is established in line with China’s strategy to develop Pudong.

Intel dismantled its channel platform department in Shanghai last December, and over 200 employees were affected. This department, previously one of Intel’s five global departments, was moved to Shanghai in August 2005, marking the first time Intel setting its global department overseas in the company’s more than 40 years’ history.

Shanghai, Dalian, and Chengdu have long been competing for Intel’s investment in China. This adjustment offended the Shanghai government. ??

Intel said the adjustment was made due to the “influence of the current economic situation”. Before the Chinese New Year the company decided to close five factories globally, including those in Malaysia, Philippines, Oregon, and Santa Clara, California, and about 6, 000 employees were affected. Founded in 1968, the factory in Santa Clara is Intel’s last factory left in Silicon Valley.

Paul Otellini, the president of Intel, said at an internal meeting that the company could not rule out the possibility of making a loss during the first fiscal quarter of 2009. Net loss has never occurred in the company since 1986. Some signs shown in its financial statement for the fourth quarter of 2008 indicated a 23% and 90% year-on-year decline in revenues and net profits respectively.

However, Intel also announced three investment plans, including $110 million additional investment into the registered capital of Intel China Ltd, a Shanghai based investment company, seemingly in order to offset the negative influence of the adjustment. Intel will keep its original plan for other business in China, including factories in Chengdu and Dalian, Intel China Research Center, and Intel Capital China Technology Fund Phase II.

"Shanghai will still be Intel’s most important R&D center and headquarters in China." Intel emphasized.