Intel Corp, the world's largest chipmaker, announced yesterday it was moving its Shanghai assembly and testing facilities to Chengdu, Sichuan province, dealing a rare blow to the financial hub's role as a magnet to global semiconductor companies.
Observers said that Intel's decision, which will cost Shanghai about 2,000 jobs, stemmed from cost-cutting and many chipmakers were making a similar move.
'Affected by the current macroeconomic conditions, Intel plans to optimise its manufacturing resources in China by consolidating assembly and test operations from Pudong to Chengdu over the next 12 months,' Intel China said.
The company said it would continue to operate a research and development centre in Shanghai, one of four on the mainland, and increase its registered capital by US$110 million in its Shanghai-based China investment arm. Its other three mainland research and development centres are in Beijing and Shenzhen.
'The trend is irreversible for the chipmaking industry to move deep into the hinterland, where labour costs are lower and governments are keen to offer better incentives than the coastal areas,' said Li Ke, the head of information at the Chinese Semiconductor Industry Association.
'Places like Chengdu and Xian have regained their lost ground in the past decade and bank on their heritage in military equipment manufacturing to churn out talent in the area. The current global economic crisis accelerates the shift of tack.'