Intel is to lay off 650 factory workers at its plant in Dupont, Washington, where it assembles PCs and servers to be sold by partners such as Dell on an OEM basis.
Intel denied that it was planning to pull out of this business, but said assembly would be carried out entirely by subcontractors by January 1999.
These job losses are the first tranche in a plan that will see the chip giant axing about 3,000 positions round the world by the end of the year.
The other sections of the Dupont facility, which works on research and development of workstation and large server products, will remain unaffected, continuing to employ over 1,000 people, but the company said it would not "immediately occupy" a third building that it has been constructing on the same site.
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