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Intel to Close Costa Rica Plant, Cut 1,500 Jobs

The move is part of a larger effort by the chip maker to become more efficient and cut costs as it pursues the mobile market.

Intel executives said in January that the giant chip maker would have to cut about 5,000 jobs as it tries to transition to new markets like mobility, cloud computing and the Internet of things. About 1,500 of those job losses reportedly will come out of Costa Rica.

Intel is closing an assembly-and-test facility in the Central American country, part of a larger move to consolidate such work at plants in China, Malaysia and Vietnam, according to company spokesman Chuck Mulloy. The closing of the factory, established in 1997, will still leave more than 1,000 Intel employees—including engineers, finance and human resources workers—in Costa Rica, and the chip maker is hoping to add another 200, Mulloy told Reuters.

The plant closing is coming at a sensitive time for the country, which on April 6 elected a new government. According to Reuters, Costa Rica President-Elect Luis Guillermo Solis was assured by Intel executives during a meeting April 8 that the decision to close the factory was not influenced by the country's politics.

"The decision bears no relation to the election of the new Costa Rica government or the market conditions for ... potential foreign investment," a statement from Solis' office stated.

Still, the country is taking a hit. Soon after Intel said it was closing the factory and cutting 1,500 jobs, Bank of America said it was shuttering operations in several countries, including Costa Rica, costing the country another 1,500 jobs.

For Intel, the closing of the Costa Rica plant and the consolidation of operations in Asia is part of a larger effort to pare costs and become more efficient. Intel was caught flat-footed several years ago when the mobile device market—particularly smartphones and, later, tablets—started to skyrocket and global PC sales began to slow.

Now Intel is working to reduce its reliance on the PC space while trying to expand its reach in the mobile device market. At the same time, the company is moving aggressively into a range of other burgeoning areas, such as the Internet of things, wearable devices, big data and cloud computing.

Intel in 2013 saw its revenues fall 1 percent, to $52.7 billion, over 2012, and income decrease 13 percent, to $9.6 billion. In January, Intel executives said revenues in the first quarter of 2014 will be about $12.8 billion, with revenues for the whole year being flat. Intel is scheduled to release its first-quarter financial numbers April. 15.