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Costa Rica Suffers as Intel Pulls Out… and heads to China?

Microprocessors are Costa Rica’s primary export according to their Foreign Trade Ministry. The country was building a name for itself as a tech center in Central America. Intel just put a damper on those plans. The influential company is closing their microchip assembly and testing operations leaving 1,500 locals unemployed.

Intel previously touted their contributions to their Central American host country. They indicated that the company participated in social responsibility projects in the community, focusing on education and the environment. Earlier, Intel proudly proclaimed: “While Costa Rica has historically been known for exporting coffee beans and bananas, thanks to Intel’s investment there, those traditional exports have been surpassed by circuits and computer chips.”

Sadly for Costa Rica, Intel just forfeited those accomplishments.

The video above shows that Intel invested heavily in San Jose, Costa Rica facilities, creating an packaging line, all Intel’s Ultra Park and many more facilities.

Those manufacturing jobs will be moved to Asia after 15 years on Costa Rican soil. However, La Nacion reports that the company’s offices in Belen free trade zone in Heredia will continue to employ 1,200 workers in the Engineering and Design departments.

When rumors began to circulate about the plant closure, Luis Guillermo Solis, a politician running for President said: “We want Costa Rica to be a country friendly to foreign investment.” He based his pronouncement on the quality of the workforce, and good conditions for investment including stability of the economic policies of the country.
Juan Ramón Rivera, president of the Costa Rican Chamber of Industries, agreed that their country has a lot to offer tech companies. “We believe our country continues to offer interesting conditions for the development of the industrial sector. We deeply regret the decision they [Intel] were forced to make.

However, in 2010 when Costa Rica was proposing a taxation of free-trade zone businesses, Michael Forrest, Intel Costa Rica’s general manager, indicated that Intel decided against a large investment in the country due to uncertain fiscal policies. Now, Intel who has been trying to regain ground in the industry said: “The best long-term solution to maximize global operational efficiency and effectiveness is to close its assembly and testing operations in Costa Rica.”

Costa Rica is not being singled out. In the last six months, employees in the US have been affected by layoffs in Massachusetts, Arizona, and Oregon. Malaysia and Spain have felt the pain as well. Only time will tell if Intel’s planned move will provide a more profitable and stable economic environment.

Does this has anything to do with Intel’s decision to expand the R&D Center in Malaysia, which developed a good portion of Haswell microarchitecture, or the recently announced R&D Centers in Shenzhen, China – remains to be seen.