U.S.-based chipmaker Intel Corporation will relocate a part of its production facility in Malaysia to Vietnam as well as China in an effort to cut labor costs, according to government website chinhphu.vn.

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The relocation of the Intel plant in Kulim to facilities in Ho Chi Minh City and Chengdu (China) will result in the layoff of 600 Malaysian workers at the plant, chinhphu.vn reported, quoting Malaysian news website The Star.

In addition to the relocation, the Kulim plant, specializing in manufacturing motherboards and assembling processor packaging since 1995, will receive new technology products from places like Costa Rica to support the server market and other trendy consumer electronic products, The Star reported.

Intel has employed about 8,000 Malaysian workers, more than 40 percent of whom are working for the Kulim plant.

That smartphones are increasingly popular has led Intel to change strategy and promote the production of processors at a higher level, the Malaysian news website said.

Many technology corporations like Samsung, LG, and Microsoft have also been also moving production bases to Vietnam due to the advantage of cheap labor and the strategic location of the country as a gateway to the Southeast Asian region.

Gearing up

Intel Products Vietnam CEO Sherry Boger in November last year announced that the company would install a second production line to manufacture computer CPUs at its Ho Chi Minh City factory, part of Intel’s effort to expand the production of its flagship products in the Southeast Asian country.

Four months earlier, Sherry Boger had said that eighty percent of the Intel semiconductor chips used in computers around the world would be made at its plant in Ho Chi Minh City by August 2015.  

Meanwhile, the 4th generation Haswell CPUs would be produced at the plant in the Saigon Hi-Tech Park in District 9 by October last year, Boger told local media then.

To achieve the target, the company had imported 71 pieces of equipment from factories in Malaysia and Costa Rica and sent 105 Vietnamese engineers to the Malaysian factory for training.

It would import 159 more devices to ramp up CPU production in Vietnam, she added.

Intel Products Vietnam has more than 1,000 local employees and it took them only two months to be certificated to produce the Haswell processors, which the CEO said was an unexpected success for such a hard-to-make product.

The Vietnamese plant is making two of Intel’s flagship products, the SOC (system on a chip), used for tablets and smartphones, and the Haswell CPU after the chip-making titan began its operations at the SHTP in 2010, Boger told Tuoi Tre (Youth) newspaper in July last year.

It took the Intel factory in China’s Chengdu fifteen years, and one in Malaysia 40 years, to reach a similar milestone, Boger added.

In April 2014, Intel announced that it would transfer the assembly facility from Costa Rica to Asia to enhance competitive advantage.

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