& cplSiteName &

Has Intel Smelled the Coffee?

Carolyn Mathas
News Analysis
Carolyn Mathas
4/7/2014
50%
50%

Intel is rumored to be laying off manufacturing staff in Costa Rica and relocating resources to Asia-Pacific as it bids to lower costs and compete on price in the mobile and server chip sectors.

Local media reports in Costa Rica, where Intel is a significant and important employer, suggest that about 1,500 of the 2,500 Intel Corp. (Nasdaq: INTC) manufacturing staff may lose their jobs as a result of the move. About 1,200 jobs in Engineering and Design will, however, remain unaffected and may even grow, with the potential addition of 200 more positions being suggested.

If the reports are accurate, it would be a major blow to the Central American country, as Intel's investment of $800 million over the years has resulted in microprocessors accounting for more than 20% of Costa Rica's exports in 2013, which in dollar terms is about $2.4 billion worth of chip-related exports. (And you thought it was just coffee and bananas being shipped out of Costa Rica…)

Political rhetoric indicated that Intel's move may be the result of rising utility costs. In late February, the Costa Rican Union of Chambers and Associations of Private Business Sector (UCCAEP) stated that the cost of electricity is dramatically pushing up production costs in the country. The organization performed a survey and asked employers if any single factor was leading to higher costs: 45% indicated that electricity prices had a high or very high impact, while 20% indicated that electricity prices had a greater impact than fuel prices and wage adjustments.

But if Intel is pulling out of manufacturing in the country in a significant way, it's likely not just because of increasing power prices or the political unrest cited by some (Costa Rica has just had a presidential election, won by Luis Guillermo Solis of the centre-left Citizen Action Party).

More likely is that this is part of a bigger shift by Intel towards an aggressive push into markets where it currently is not the dominant player. While the company controls most of the global high-end processor market, its products in the mobile and server markets are not price-competitive. Intel looks ready to remedy that situation and try to build a presence in the low-price device market, where all the action is. (See Intel CEO Gives It Large in China and 2014: Intel's Year of Living Wirelessly?)

As a result, it's most likely looking to cut every dime of manufacturing cost possible so it can take on the likes of Qualcomm Inc. (Nasdaq: QCOM) and Advanced Micro Devices Inc. (NYSE: AMD).

Whatever the reason, if the rumor is true, and Intel is drastically cutting back its presence in Costa Rica, it would be a major blow for the tiny country of only 4.8 million residents, and present Solis, who says he will meet with Intel in the coming week, with a significant early challenge.

— Carolyn Mathas, Contributing Editor, special to Light Reading

(7)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Ray@LR
50%
50%
Ray@LR,
User Rank: Blogger
4/9/2014 | 11:56:25 AM
Re: It's Official
Thanks for the update Carolyn - like you say, that sounds like a real blow to Costa Rica.

And good news for far east Asia I guess...
CMathas
50%
50%
CMathas,
User Rank: Blogger
4/8/2014 | 4:04:02 PM
It's Official
Intel announced today that it will close the Costa Rica chip assembly plant and lay off 1,500 workers. The closure will take place over the next six months. As reported, Intel will keep engineering and design in CR. I reported they will add 200 jobs and that is still in the works. The total in this department will then reach 1,200. that's a tough one, Costa Rica.
MikeP688
50%
50%
MikeP688,
User Rank: Light Sabre
4/7/2014 | 6:29:33 PM
Re: Left of center?
What is unfortuante is how such people take things for granted--they should look at Afghanistan in how people defied the threats in order to speak up.    I do think though that Intel--just like Microsoft--will be resilient enough to adapt to the new realities.   It will be fascinating to observe, though as the dynamics work itself out.
CMathas
100%
0%
CMathas,
User Rank: Blogger
4/7/2014 | 6:23:56 PM
Re: Left of center?
What's sad is how few people showed up to vote. The country really does have serious challenges ahead. Average wages are extremely low, jobs are not plentiful and although the education level is said to be very high - that may be true in San Jose, but maybe not so true in the balance of the country.

 
MikeP688
50%
50%
MikeP688,
User Rank: Light Sabre
4/7/2014 | 6:19:07 PM
Re: Left of center?
I have been watching with curious eyes the current election process in Costa Rica.  It is a country that--despite a very proud heritage you've alluded to--has its' share of challenges as it grapples with healthcare and now w/this blow to the economy, how to somehow continue to navigate in a rather challenging World that is now the World Economy.

As for intel, I am of the view of it is a bit late into the game.    The major players today are truly amazing with the product mixes they're offering.   Can Intel adapt?  Time will tell.

 
CMathas
50%
50%
CMathas,
User Rank: Blogger
4/7/2014 | 3:45:06 PM
Re: Left of center?
Read again - the left-of-center had to do with the political party of the newly elected, not the country in general. You are absolutely right - as in correct - about the fact that the country does not have a military and it is one of the most stable governments in the region. I spent nearly a year living in Costa Rica and it is a most enjoyable place, once you get past big bugs, howler-monkey alarms at 5 am, and scorpions finding their way inside...

 
tb100
50%
50%
tb100,
User Rank: Moderator
4/7/2014 | 3:37:25 PM
Left of center?
I haven't been keeping in touch with what's been happening in Costa Rica lately, but where does this 'left of center'=unrest argument come from?

Unstable dictatorships in Latin America come in all forms, left and right both well represented.

Costa Rica, on the other hand, has always had a stable democracy, and, in fact, it doesn't even have a military! Do you know something we don't know about Costa Rica stability or is this just an off-the-cuff remark?
Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
LIVE NOW!
Friday, December 2, 1:00PM EST
The SDN Approach to IP & Optical Integration
Sterling Perrin, Senior Analyst, Heavy Reading
UPCOMING COURSE SCHEDULE
Friday, December 2, 1:00PM EST
The SDN Approach to IP & Optical Integration
Sterling Perrin, Senior Analyst, Heavy Reading
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
Women in Comms Introduction Videos
Korn Ferry Consultant: How to Find, Cultivate & Be the Best Talent

11|30|16   |   4:10   |   (1) comment


Erin Callaghan, a managing consultant for Korn Ferry Futurestep, shares strategies for companies to improve how they recruit and for women to ensure they don't get lost in the pipeline.
LRTV Custom TV
We Can Make the World More Sustainable

11|29|16   |     |   (0) comments


GeSI is a global e-Sustainability Initiative organization bringing together 40 big multinational companies around the world. According to GeSI's report, information and communication technology can make the world more sustainable. Luis Neves, chairman of GeSI, shared with us his opinion at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
Finding a New Way to Engage Customers & Drive Revenue

11|29|16   |     |   (0) comments


Mobile revenues are declining. Digicel, a player in the Caribbean telecommunications/entertainment space, has found a new way to engage customers and drive revenue. John Quinn, CTO of Digicel, shared with us its story at Ultra-broadband Forum (UBBF2016)
LRTV Custom TV
Do You Really Need Gigabit Infrastructure?

11|29|16   |     |   (0) comments


Altibox is the biggest fiber-to-the-home (FTTH) player and the largest provider of video and TV in Norway. They started out with zero customers in 2002. Now they have close to half a million households and companies attached to their FTTH business. Nils Arne, CEO of Altibox shared with us their story and insight on 5G at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
BT’s Openreach Strategy & Its Updates in 2016

11|29|16   |     |   (0) comments


A lot of developments at Openreach this year in terms of strategy and planned investments. Peter Bell, CIO of Openreach BT, shared with us the updates of Openreach at Ultra-broadband Forum (UBBF2016).
LRTV Custom TV
ITU: The Broadband Is Our Future

11|29|16   |     |   (0) comments


At Ultra-broadband Forum, Houlin Zhao, Secretary General of ITU, discussed how important it is for countries, companies and everybody to be working together to help to build the broadband and digital economies (UBBF2016).
LRTV Custom TV
Tackling 5G in Dallas

11|28|16   |     |   (0) comments


Here are our highlights of the 5G North America show in Dallas, Texas with Light Reading's Dan Jones.
LRTV Interviews
Cox Prepping for Virtualization Trials

11|14|16   |     |   (0) comments


In this video interview, Cox's Jeff Finkelstein discusses MSO's plans to test managed business services in early 2017 and tackle Distributed Access Architectures.
LRTV Custom TV
Drivers & Potential of NGP

11|11|16   |     |   (0) comments


ETSI has created an Industry Specification Group to work on Next Generation Protocols (NGP ISG), looking at evolving communications and networking protocols to provide the scale, security, mobility and ease of deployment required for the connected society of the 21st century. The NGP ISG will identify the requirements for next generation protocols and network ...
LRTV Custom TV
Huawei IP 2020 for Future Networks

11|11|16   |     |   (0) comments


Future Networks should satisfy many requirements such as high throughput, extremely low latency, flexible mobility, intrinsic security, networking automation, and so forth. The Chief Architect of Huawei Future Networks addresses a holistic solution, i.e., IP 2020, to achieve these requirements for various future life scenarios (e.g., autonomous driving, tactile ...
LRTV Custom TV
Digital Object Architecture

11|11|16   |     |   (0) comments


Digital Object Architecture provides a basic information infrastructure that can facilitate interoperability between or among different systems, processes, and other information resources, including different identity management systems. Digital objects are networked objects that are named by digital object identifiers and instantiated by an infrastructure service ...
LRTV Custom TV
BT's Openreach Has High Hopes for Long-Reach VDSL

11|11|16   |   06:04   |   (0) comments


Peter Bell, Network Portfolio CIO at BT's access business Openreach, talks about the operator's trial of a new broadband access technology called Long Reach VDSL.
Upcoming Live Events
December 6-8, 2016, The Westin Excelsior, Rome
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Hot Topics
AT&T Debuts DirecTV Now on New Video Platform
Mari Silbey, Senior Editor, Cable/Video, 11/28/2016
Apple Seeds 5G? Seeks 'Multi-Gigabit' Chip Designer
Dan Jones, Mobile Editor, 11/30/2016
Altice Plans FTTH for Entire US Footprint
Iain Morris, News Editor, 11/30/2016
Altice FTTH Bill Could Hit Almost $9.6B in US
Iain Morris, News Editor, 12/1/2016
Samsung Bows to Investors, Considers Revamp
Iain Morris, News Editor, 11/29/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Eyal Waldman, CEO of Mellanox Technologies, speaks to Steve Saunders, CEO of Light Reading, for an exclusive interview about the 100 GB cable challenge, cybersecurity and much more.
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Live Digital Audio

Even when there's a strong pipeline of female talent in the comms industry, it tends to leak all the way to the top. McKinsey & Company says women experience pipeline leakage at three primary points: being unable to enter, being stuck in the middle or being locked out of the top. Each pipeline pain point presents its own challenges, but also opportunities to stop the leak. Wireless operator Sprint is making a conscious effort to improve its own pipeline from new recruits to the C-suite, and it wants the rest of the industry to do the same. In this Women in Comms radio show, WiC Board Member and Sprint Vice President of Enterprise Sales Nelly Pitocco will give us her take on the industry's pipeline challenges. Pitocco, who joined Sprint in May and has spent 20 years in the comms industry, will also offer solutions, share how Sprint is tackling the challenge within its own organization and take your questions live on air.