Intel will delay ops of new facility being built in Penang — CEO Gelsinger

• This is the second foreign big name that has put the brakes on expanding production, after Osram Opto Semiconductors Sdn Bhd, a unit of Austrian-German leading intelligent sensor and emitter-maker ams Osram.

KUALA LUMPUR (Sept 17): Intel Corp will delay the operations of a new plant currently being built in Malaysia as the world’s largest computer chip maker grapples with declining sales and mounting quarterly losses.

This is the second foreign big name that has put the brakes on expanding production, after Osram Opto Semiconductors Sdn Bhd, a unit of Austrian-German leading intelligent sensor and emitter-maker ams Osram.

In Oct 2023, Permodalan Nasional Bhd (PNB), together with the Employees Provident Fund (EPF) and Kumpulan Wang Persaraan (Diperbadankan) (KWAP), had signed a 10-year sale and leaseback agreement with Osram Opto for its new plant in Kulim, in which PNB, EPF and KWAP funds had invested RM2 billion. Osram Opto later decided not to begin operation at the new plant after it lost a contract from a key customer.

According to a note to employees from Intel chief executive officer Pat Gelsinger, the chipmaker still plans to complete the construction of its new advanced packaging factory in Penang. Malaysia remains an active design-and-manufacturing hub through its existing operations, he noted.

“We plan to complete the construction of our new advanced packaging factory in Malaysia but will align the start-up with market conditions and increased utilisation of our existing capacity,” Gelsinger said.

The expansion project involved investment of more than US$7 billion (RM29.96 billion) when it was announced in 2021 at a time when the world was facing a shortage of chips on the back of the Covid-19 pandemic. The facility was expected to begin production in 2024 and create over 4,000 jobs for Intel in Malaysia.

The company first opened its Malaysian manufacturing facility in 1972. The country is Intel’s largest site outside of the US with some 14,000 employees. 

However, Intel is now facing its second, much larger net loss this year as sales slipped, prompting the company to cut about 15,000 jobs by the end of this year.

“We will pause our projects in Poland and Germany by approximately two years based on anticipated market demand,” Gelsinger said in the note dated Sept 16.

The measures are part of an aim to deliver US$10 billion (RM43 billion) in savings and create “a more competitive cost structure” announced last month.

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