With demand sucking wind and an inventory stockpile still to sell, Intel said that it would shutter five manufacturing operations - two assembly test facilities in Malaysia and one in the Philippines as well as a 200mm wafer fabrication plant in Oregon and wafer production in California, a move that will affect 5,000-6,000 employees, some of whom will be offered transfers.

It will take the company, which said it was aligning its manufacturing capacity to current market conditions, until the end of the year to act and will not impact its 42nm manufacturing or its move to 32nm.

The semiconductor giant is said to be contemplating a Q1 loss.

In a memo to employees last week following an internal webcast Intel CEO Paul Otellino apparently raised the specter that the company may suffer its first loss in 22 years this quarter.

Last week Intel reported Q4 earnings down 90% on revenues down 23% and said conditions are so murky it dare not project ahead.

According to Bloomberg and later the Wall Street Journal, Otellini told employees the first quarter is "too close to call" and warned that "We are not going to wake up in six months with everything rosy again."

The memo said the company was going to slow production, which would force it to close some sites and relocate some production workers.

Intel has publicly expressed confidence that margins will return to "healthy" levels in the second half. Rather than give Q1 guidance it said it was using $7 billion in revenues for "internal planning purposes" and a gross margin in the "low 40s." If it goes to 40% the numbers run red.