Intel Maintains Course on Operations in Penang

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Intel Corporation, the US semiconductor giant, has reaffirmed its commitment to its Malaysian operations amidst speculation about potential downsizing and pauses in expansion plans.

The company, which has been a cornerstone of Malaysia’s tech industry since 1972, employs approximately 14,000 workers in its facilities in Penang and Kedah.

A company spokesperson stated, “Malaysia will remain an important market as we build on our long and proud history here.” This statement comes in response to rumours that Intel might be reconsidering its investments in Malaysia and other parts of the world due to financial challenges and shifts in the tech industry landscape.

In 2021, Intel announced a significant RM30.3 billion (US$7 billion) investment plan for Malaysia, which included expanding its operations in Kulim and establishing its first facility outside the US for advanced 3D chip packaging in Penang. This investment was set to bring Intel’s total investment in Malaysia to RM60.6 billion (US$14 billion) by 2032.

However, recent reports suggested that Intel had partially paused its Penang expansion due to cash flow issues. The company has faced financial headwinds, reporting losses of over US$1.6 billion in its fiscal second quarter, compared to a profit of US$1.48 billion in the same period last year.

These challenges come as the tech industry undergoes significant shifts, with a growing focus on AI servers and a slowdown in PC sales. Intel, once a dominant force in the semiconductor industry, is now striving to catch up with companies like Nvidia Corp in the AI chip market.

Despite these challenges, Intel maintains that it has not announced any changes to its expansion plans in Malaysia. An Intel spokesperson told The Edge, “We have not announced any changes to our plans.” The company’s commitment to the country remains strong, with Malaysia continuing to be Intel’s largest site outside of the United States.

As part of its global restructuring efforts, Intel is reportedly considering job cuts that could affect up to 15% of its 131,000 employees worldwide. There are indications that the company might introduce early retirement and voluntary separation schemes to reduce its workforce.