KUALA LUMPUR: Intel Corporation said it remains committed to its long term expansion plans in Malaysia despite plans to delay start-up of its new factory in Penang due to lower than anticipated demand.
The Penang factory will be Intel's first overseas facility for advanced 3D chip packaging, known as Intel's Foveros technology.
It was to position Malaysia as Intel's largest production base for 3D chip packaging.
"For advanced packaging, we plan to complete the construction of the new factory in Penang. However, we will time the startup based on market conditions and the increased utilisation of our existing capacity. "Overall, Intel remains committed to our long-term expansion plans in Malaysia," the company said in an email reply to Business Times.
The company said it completed several expansion projects tied to its existing operations in Malaysia over the last two years.
"The Penang Assembly and Test factory increased its square footage through conversion of existing non-factory space, we added die preparation to the existing Kulim Die Sort facility (now known as Kulim Die Sort/ Die Prep), and we added significant new assembly and test space in Kulim by purchasing and retrofitting an existing building," it added.
In a note to employees on Monday, Intel Corp chief executive officer Pat Gelsinger announced that the company will pause its projects in Poland and Germany by about two years based on anticipated market demand.
As for Malaysia, he said it remains an active design and manufacturing hub through its existing operations.
"We plan to complete the construction of our new advanced packaging factory in Malaysia but will align the startup with market conditions and increased utilisation of our existing capacity," he said.
In December 2021, Intel committed to a US$7 billion investments in Malaysia over the course of a decade.
The investments are mainly to increase the size of its operations in Penang and Kulim, Kedah.
This brought the total committed investment in Malaysia by the US chip giant to US$14 billion as of 2032.
As at August last year, Intel had more than 10,000 workforce across two campuses in Penang and Kulim.
For the second quarter of 2024 (Q2 2024), Intel reported a one per cent year-on-year decline in revenue to US$12.8 billion.
The quarter's results were impacted by gross margin headwinds from the accelerated ramp of its AI PC product, higher than typical charges related to non-core businesses and impact from unused capacity, said the company's chief financial officer David Zinsner.
Gelsinger noted the quarter's financial performance as "disappointing" although it hit key product and process technology milestones.