Penang, 15 July 2016 (MyTimes) – Seagate Technologies will shut down several operations in Malaysia, including its manufacturing facilities in Penang and Seremban, following recent restructuring plans by the US-based hard-disk maker, says a Seagate spokesperson.
Seagate is targeting to cease operations of these facilities by the end of 2017.
The spokesperson said the closure is part of its global footprint consolidation and restructuring plan to reduce cost, combat the weak harddisk drive demand and confront the technological changes in the storage market.
“Given the current conditions, Seagate’s path forward requires a more efficient manufacturing footprint and highly optimised product portfolio.
“To that end, Seagate has made the difficult decision to ramp down several company facilities, including the manufacturing facilities in Penang and Seremban in Malaysia.”
It is believed that 3,900 Seagate employees will be affected in this exercise which is expected to be completed by June next year.
In an emailed response to The Malaysian Reserve, the spokesperson said: “It’s not easy to make decisions that affect people’s lives in this way. Malaysia remains an important partner to Seagate.”
However, the restructuring will not involve Seagate’s IT Shared Resources Centre and Human Resources Call Centre for Asia Pacific in Penang. Seagate’s substrates manufacturing facility, Seagate International (Johor) Sdn Bhd, is also not affected under the restructuring.
Earlier this week, the company announced it will axe 6,500 jobs of its global headcount by the end of fiscal year 2017. The latest retrenchment came a couple of weeks after it announced it was letting go 1,600 staff. The US-based storage maker employs about 45,000 people worldwide before the retrenchment.
The retrenchment is part of its restructuring plan for continued consolidation of its global footprint across Asia, Europe, the Middle East and Africa, and the Americas.
The exercise will cost the hard-disk maker about US$164 million (RM646.16 million) in its 2017 fiscal year.
It was repor ted that Seagate’s revenues had declined in the past five quarters due to weak demand from original equipment manufacturers, including personal computers makers.
It is not known whether the cost reduction exercise would impact Seagate’s RM1.05 billion announcement to build a new plant in Batu Kawan.
Penang Seagate, a subsidiary of Seagate Technology International, was incorporated in 1988.
A few technology multinationals operating in Malaysia announced their restructuring. In April, chipmaker Intel Corp announced the reduction of its worldwide headcount by 12,000 or an 11% of its entire global workforce.
It is believed that the move could affect its workers in the Penang and Kulim plants.
In July last year, Fairchild Semiconductor International Inc announced the sale of its Penang factory which resulted to 1,000 employees losing their jobs.
Fairchild Semiconductor was one of the eight companies that set up operations in Penang in the 1970s.
Another US-based company Amphenol Corp also followed suit in October in which the group made a decision to relocate its mobile devices and mobile networks operations from Penang to China. – Malaysia Reserve