Intel said on February 5 that it would shift some assembly and test facilities from this eastern financial hub to the inland province of Sichuan, a move likely to affect about 2,000 jobs.

Intel, a leading computer hardware maker

The economic downturn has had an enormous impact on the semiconductor sector, forcing companies to take measures to cut costs, said Liu Liang, an analyst at Industrial Securities Co. Ltd.

Moving operations from Shanghai, a high-cost city, to a cheaper place like Sichuan might be an effective way to cope with the financial crisis, he said.

In addition, such a move could stimulate the economy in Sichuan, which was still trying to recover from last year's catastrophic 8.0-magnitude earthquake, Liu said.

The quake uprooted millions of people, leaving many without homes or jobs.

US-based Intel announced the move in a notice posted on its website. The notice said the company would move a Shanghai-based assembly and test factory to Chengdu, capital of Sichuan, within 12 months.

The move will mean increased activity in Chengdu and a corresponding workforce reduction in Shanghai, which will affect about 2,000 employees, it said.

The company said it would offer positions to the employees either in the Chengdu factory, a plant in Dalian that is under construction, or other Intel China locations that need experienced staff.

Intel also intends to increase investment in the Dalian factory, to equip it with the latest available advanced microprocessor technology.

The notice said Shanghai would remain its core research and development base in China, as well as its regional headquarters. Other Intel factories and projects would proceed as planned.

The company also said it would increase its registered capital by US$110 million  in Intel China Ltd., the company's investment holding firm in Shanghai.

"The plans are expected to enhance the capacity of the Chengdu plant, optimize manufacturing resources and consolidate Intel's operations in China," said Nancy Zhang, director of the public relations group.

"Intel has been very prudent in making decisions. The proposed policy changes demonstrate Intel's deep-rooted confidence in the Chinese market," she said.

She said she could not give further details about the planned changes.

Shanghai municipal commission of commerce said Intel has submitted an application to the Ministry of Commerce for recognizing Intel China Ltd. as a national-level headquarters. The company had been ratified by the Shanghai authority as Intel China's regional headquarters before.

However, Nancy Zhang said she had no information about this.

According to Shanghai's preferential policy taking effect last December, a foreign company could get a 5-million-yuan (over US$731,000) subsidy for opening regional headquarters in the city and more than 2.6 million yuan for renting offices in three years. The opening subsidy could rise to 10 million yuan if the headquarters get recognition from the Ministry of Commerce.

(Xinhua News Agency February 6, 2009)