KULIM: Intel Malaysia, which is closing two of its microchip production facilities in Penang — a move which will affect over 1,000 workers — has started laying off employees at its Kulim facility which has more than 3,500 workers.

Sources told The Edge Financial Daily that at least 16 people out of 26 employed in the department in charge of maintaining the three plants in Kulim were asked to leave yesterday.

According to a source, the workers were not offered a voluntary separation scheme or even asked if they wanted to leave.

“They were told their services were no longer needed and it was not restricted to any age group or hierarchy. The affected employees were technicians, supervisors and even managers.

“They are being paid a severance package of 1.5 months’ salary for every year of service,” the source said.

It is learnt that more employees from other departments would also be asked to leave in the coming days and months but their number could not be ascertained.

On Jan 21, Intel announced it was closing two of its three plants — PG6 and PG7 — on Penang Island which were the company’s smallest and oldest plants in Malaysia.

Then, Intel had said that the 1,000-odd employees at the plants which would be closed down by year-end, would be offered comparable positions in its four other plants in Penang and Kulim.

Intel Malaysia corporate affairs manager Loo Cheng Cheng had said that those affected by the closure of PG6 and PG7 would be given an option to work at Intel’s other plant in Penang, PG8, or at its three plants in Kulim. It was also reported that all the production processes will be moved to PG8 and Kulim by year-end.

Intel had also said it was not able to confirm if there would be any retrenchment or voluntary separation scheme.

PG6 and PG7 produce networking communication products such as chipsets, PG8 produces microprocessors while the  Kulim facility makes a series of microprocessors and chipsets.

Intel Malaysia has a total workforce of close to 10,000 and has been one of the pioneering multinational companies to set up shop in Penang in 1972. It has to-date invested over US$2.3 billion (RM8.28 billion) in Malaysia.It started off with an assembly and test plant in Penang and extended its manufacturing facility to the Kulim Hitech park in 1996.

US-based Intel Corporation, which faced its first quarterly loss in 21 years, also said it had no plans for salary cuts but was undertaking other cost-cutting measures, including shutdowns during festive periods.

Intel Corporation had announced in January that it would restructure some of its manufacturing operations and align its manufacturing capacity to current market conditions.

The move was expected to affect between 5,000 and 6,000 employees worldwide.

Intel Malaysia could not be reached for comment on the latest developments in Penang.