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Intel to Shutter Massachusetts Fab

The facility, which Intel bought from DEC in 1994, uses outdated technology to build low-margin chips, according to an Intel spokesman.

Intel will shut down its chip-making facility in Massachusetts in a move that will mean as many as 700 job cuts.

According to a report in The Boston Globe, Intel will close the fab in Hudson, Mass., by the end of 2014 as the company looks to invest its money in new and more modern facilities. Intel spokesman Chuck Molloy told the newspaper that the company will try to find another chip-maker to buy the fab, which was built in 1994 by Digital Equipment Corp. (DEC) for $425 million to build its Alpha chips and sold to Intel in 1997 for $700 million.

Molloy said the plant in Hudson—a town about 40 miles west of Boston—uses chip-making equipment that is more than 10 years old and doesn’t produce any of Intel’s Xeon, Core or Atom chips. Instead, the chips it makes are used in low-end systems and don’t make the same kind of profit that the other product lines do.

Bringing the Massachusetts plant up-to-date would entail building a fab twice the size of the current one, Molloy told the newspaper. That would be impossible due to a lack of available land, he said.

The plant will remain at almost full capacity until it shuts down in order to fill existing orders and build up inventories of the chips that will no longer be used once the fab closes, according to the Globe. Intel, which has about 105,000 employees, will lay off about 100 workers over the next three to four months, while the rest of the workers will stay on until the fab closes.

An R&D facility in Hudson that employs 850 people will remain open and will not be impacted by job cuts, according to Intel.

The news of the plant’s closing comes just as the chip maker wraps up its annual three-day Intel Developer Forum (IDF) in San Francisco, where company executives unveiled a range of new high-profile chips, including the much-anticipated Atom Z3000 “Bay Trail” systems-on-a-chip (SoCs) for tablets, notebooks and new PC form factors, and the Xeon E5-2600 v2 processor family for servers and other data center systems.

Intel CEO Brian Krzanich also introduced a new family of chips coden-amed “Quark,” which will be targeted at such segments of the embedded space as wearable devices and the Internet of Things.