& 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?
From The Founder
Cisco's Conrad Clemson, recently promoted to head up the company's Service Provider Apps & Platforms developments, talks to Light Reading's Founder and CEO Steve Saunders about how he's bringing cloud video, mobile and virtualization together to empower network operators.
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.
LRTV Interviews
Heavy Reading: The Web-Scale View

1|18|17   |     |   (0) comments


At Light Reading's 2020 Vision Executive Summit in Rome, Heavy Reading's former chief analyst Patrick Donegan shared insight from the recent web-scale operators report, which featured research on how web-scale operators view the market, the best web-scale companies to ...
LRTV Custom TV
Cisco's Cloud Scale Networking: Automation, Virtualization & Simplification

1|18|17   |     |   (0) comments


Cisco's Sanjeev Mervana outlines the latest innovations in networking technology at CES 2017 in Las Vegas.
LRTV Custom TV
ADVA Talks Innovation & the Future of Networking

1|17|17   |     |   (0) comments


Ray Le Maistre and Christoph Glingener, CTO of ADVA Optical Networking, discuss the current state of the industry, cooperation and collaboration, open innovation and the future of networking.
LRTV Custom TV
Cisco's Infinite Video Platform

1|17|17   |     |   (0) comments


Cisco's Infinite Video Platform allows service providers to deliver broadcast-quality video over IP networks. Infinite video supports many devices, from 4K TVs to tablets to game consoles. Join Cisco's Rajeev Raman for a brief tour and live demo.
LRTV Interviews
Masergy: Ability to Adapt Key for NFV

1|16|17   |   6:40   |   (0) comments


Speaking at Light Reading's 2020 Vision in Rome, Masergy's VP, Global Technology, Ray Watson, said agility is key to providing the mix and match NFV-based services that are driving business for the managed service provider today.
LRTV Interviews
Equinix: The Data Explosion

1|13|17   |   4:16   |   (0) comments


At Light Reading's 2020 Vision in Rome, Eric Schwartz, president of EMEA, Equinix, talked about how Equinix is helping its customers manage the influx of data today, and how it's preparing for a future filled with millions of connected IoT devices.
LRTV Interviews
Heavy Reading: The Changing Data Center Landscape

1|12|17   |   6:05   |   (1) comment


At Light Reading's 2020 Vision event in Rome, Heavy Reading's Senior Analyst Roz Roseboro talks about how virtualization is impacting data center evolution and how that evolution is affecting the relationship between service providers, data center operators and public cloud providers.
LRTV Interviews
Boingo: Prepping for Millions of Devices

1|12|17   |   5:07   |   (1) comment


At Light Reading's 2020 Vision in Rome, Boingo's CTO Derek Peterson discusses how wireless operators will address the needs of low-bandwidth and high-bandwidth apps at the same time, the need for more MHz, the impact of IoT and more.
LRTV Interviews
Comcast Shows Off Gig Gateway at CES

1|11|17   |     |   (1) comment


With its largest presence at CES in years, Comcast took the wraps off its long-awaited gigabit gateway and a new platform for managing the home WiFi network. Light Reading Senior Editor Mari Silbey sat down with EVP Chris Satchell to discuss the latest Comcast advance, and met with VP of Product Strategy and Development Andrea Peiro to walk through a demo of the ...
LRTV Interviews
Colt: End-to-End Key for 2017

1|10|17   |   6:21   |   (0) comments


At Light Reading's 2020 Vision Executive Summit in Rome, Nico Fischbach of Colt said having a multi-carrier, end-to-end service proposition is going to be key for 2017 -- and SD-WAN is instrumental in making it happen.
From the Founder
Cisco's Clemson on Mobile Cloud Video

1|9|17   |     |   (1) comment


Cisco's Conrad Clemson, recently promoted to head up the company's Service Provider Apps & Platforms developments, talks to Light Reading's Founder and CEO Steve Saunders about how he's bringing cloud video, mobile and virtualization together to empower network operators. "If you think about where we're going… whether it's a mobile application, or a video ...
LRTV Custom TV
VMware Telco NFV Solutions – Preparing for 5G & IOT

1|9|17   |     |   (0) comments


Shekar Ayyar, EVP & Corporate Strategy/General Manager of Telco for VMware, discusses VMware's Telco NFV solutions role and foundation for the Imminent Arrival of 5G & IOT.
Upcoming Live Events
May 15-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Hot Topics
A Women in Comms Glossary
Sarah Thomas, Director, Women in Comms, 1/18/2017
Next Plugfest Gets G.fast Closer to Market
Brian Santo, Senior editor, Test & Measurement / Components, Light Reading, 1/13/2017
TV's Paradox: No HDR Without 4K
Mari Silbey, Senior Editor, Cable/Video, 1/17/2017
Qualcomm Study Predicts 5G Will Create 22M Jobs by 2035
Dan Jones, Mobile Editor, 1/17/2017
Cable Has One Thing Verizon Needs
Mari Silbey, Senior Editor, Cable/Video, 1/17/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Light Reading founder and CEO Steve Saunders chats with Sportlogiq CEO Craig Buntin about sports data analysis.
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.
Animals with Phones
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.