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Intel closes Costa Rica operation, cuts 1,500 jobs

People visit the Intel booth at the 2013 Computex exhibition at the TWTC Nangang exhibition hall in Taipei June 4, 2013. REUTERS/Pichi Chuan
People visit the Intel booth at the 2013 Computex exhibition at the TWTC Nangang exhibition hall in Taipei June 4, 2013. REUTERS/Pichi Chuan

By Noel Randewich

SAN FRANCISCO (Reuters) - Chipmaker Intel, struggling with a shrinking personal computer market, is shutting its assembly and test operation in Costa Rica and eliminating 1,500 jobs, a spokesman said on Tuesday.

The closure of the site, which is a significant contributor to Costa Rica's exports, falls within a larger plan announced by the chipmaker earlier this year to cut spending as it attempts to grow beyond PCs into the mobile market.

"It's being closed and consolidated into our other operations throughout the world," spokesman Chuck Mulloy said of the assembly and test operations in Costa Rica.

During the next two quarters, Intel will move assembly and testing from its site in Heredia, where it has been present since 1997, to existing sites in China, Malaysia and Vietnam, Mulloy said.

Costa Rica President Elect Luis Guillermo Solis met with Intel executives on Tuesday morning and they assured him the decision had nothing to do with the election of his new government on Sunday, according to a statement from Guillermo's office.

"The decision bears no relation to the election of the new Costa Rica government or the market conditions for...potential foreign investment," the statement said.

Intel will continue to have over 1,000 engineers, finance and human resources employees in Costa Rica and do some research and development there. The chipmaker expects to add another 200 "high-value positions" in Costa Rica later this year, Mulloy said.

Intel dominates the PC chip industry, but it has been slow to adapt its processors for smartphones and tablets, markets now dominated by rivals such as Qualcomm Inc and Samsung Electronics Co Ltd.

The cuts in Costa Rica are consistent with Intel's announcement in January that it would reduce its global workforce of 107,000 employees by about 5 percent this year, Mulloy said.

Also in January, Intel said a newly built factory in Chandler, Arizona, originally slated as a $5 billion project that in late 2013 would start producing Intel's most advanced chips, would remain closed for the foreseeable future while other factories at the same site are upgraded.

Shares of Intel closed 1.60 percent higher at $26.91 on Nasdaq.

(Reporting by Noel Randewich; Editing by Leslie Adler, Diane Craft and Ken Wills)

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