The world’s leading maker of computer chips is closing its only factory in Massachusetts, eliminating up to 700 high-paying manufacturing jobs in one of the largest job cuts to hit the state in recent years.
Intel Corp. said on Thursday that its plant in Hudson is using outdated technology to make older generations of computer chips used in low-end applications, which do not generate as much profit as its higher-end microprocessors that are used in PCs.
“The facility and the site do not meet the requirements that we need,” said Intel spokesman Chuck Mulloy.
The Hudson closing is a blow to manufacturing in the state, which has undergone decades of downsizing to re-emerge as a smaller but still highly competitive industry.
High-tech manufacturing accounts for nearly one in every three factory jobs in Massachusetts, and many of those pay high wages — $80,000 a year or more, according to a recent Northeastern University report on the sector. And the Intel jobs would be at the higher end of the industry scale.
“In terms of these people and their families, and the town of Hudson, this is a major blow,” said the author of the Northeastern report, economist Barry Bluestone, who noted that overall job growth in Massachusetts has slowed in recent months. “These workers who lose their jobs will not have an easy time finding a job somewhere else.”
The plant closure also represents a setback to Governor Deval Patrick’s major effort to build up manufacturing in Massachusetts by supporting companies that produce sophisticated products that are less prone to competition from low-cost operators overseas. Until recently, manufacturing employment had been stable in Massachusetts, with pockets of employers adding jobs and some companies even complaining they were having trouble finding qualified applicants to replace retiring workers.
The Patrick administration Thursday pledged to help any laid-off Intel workers find jobs.
“While we are obviously disappointed by today’s news, we know that our manufacturing industry is on the rise in Massachusetts and will continue to play a significant role in the success of our economy,” said Gregory Bialecki, the state’s economic development chief.
Bluestone agreed that even though the 700 jobs are a big loss, the manufacturing industry in Massachusetts is not facing another period of contraction.
“Just because Intel is closing a shop doesn’t mean that we’re turning into Detroit here,” said Bluestone.
Intel said it plans to close the Hudson facility by the end of 2014 but hopes to soften the blow by trying to find another technology company that would buy the plant and continue making chips there.
The company also operates a research and development facility in Hudson employing additional 850 workers. It will not be affected by the job cuts.
Home of former governor A. Paul Cellucci, Hudson is a former mill town that in the 19th century attracted waves of immigrants to work in its many shoe factories. In more recent years, it prospered as the early computer industry grew up in suburban Massachusetts around the old Digital Equipment Corp., based in nearby Maynard.
The Intel plant was built in 1994 by Digital in its waning days for $425 million to produce its highly touted Alpha chip, one of the now-defunct company’s last-gasp efforts to keep up with a rapidly changing computer industry. Though more powerful than the best Intel processors of the era, Alpha failed to win converts among computer makers because it was incompatible with many common software programs.
The failure of the Alpha led to Digital’s exit from the chipmaking business, and Digital sold the Hudson plant and related properties to Intel in 1997 for $700 million. Digital itself was acquired by Compaq a year later, ending a 40-year run as one of the most storied names in the computer industry.
And now the Hudson’s factory run itself appears to be over. Known in the computer world as a “fab,” short for fabrication, the Hudson factory uses chip-making technology that’s more than a decade old, putting it four generations behind the equipment used in Intel’s more advanced factories. As a result, chips from the Hudson plant are used in automotive entertainment systems, factory automation equipment, and other relatively low-end applications.
The Hudson plant does not produce Intel’s better-known and more lucrative microprocessors, such as the Core, Xeon, and Atom chips.
Mulloy, the Intel spokesman, said that bringing the Hudson plant up to date would require building a facility twice its size and that the lack of available land made this impossible.
“It’s not any reflection on the workforce there. It’s not any reflection on the state of Massachusetts,” he said.
Nathan Brookwood, a chip industry analyst for research firm Insight 64 in Saratoga, Calif., said that among Intel chip factories, “the Hudson facility was always the odd man out.”
Intel designs its chip plants from the ground up to be identical to one another, so that each can produce any chip in the company’s inventory he said; by contrast, it acquired the Hudson plant after it was built and it has never fully complied with Intel’s standards. Brookwood added that Intel normally builds new plants alongside its obsolete facilities but that the lack of open land made it more logical to simply close the Hudson fab.
Municipal officials in Hudson were hopeful that Intel would make good on its promise to find a buyer who would keep it open as a factory, even if it is full of obsolete equipment.
“They have some of the best real estate people, and they’re going to try to market the portion of the facility that’s shutting down to get the best value that they can,” said Christopher Sandini, the interim executive assistant for Hudson.
Intel said its current plan involves laying off about 100 workers over the next three to four months, with the remainder of the workforce staying on until the plant is closed. These workers will be offered a severance package and given two months to find other jobs at Intel.
Mulloy said the plant will run near full capacity until it is closed, in order to fill existing orders and to build inventories of obsolete chips that will no longer be made once the Hudson plant is shut down.