SHANGHAI - INTEL Corp will close a factory in Shanghai in a reorganisation of its China operations this year that will shift work to plants in other cities, the company said on Thursday.

About 2,000 workers will be affected by the decision to move Intel's chip assembly and testing operations to Chengdu, in central China, from eastern Shanghai's Pudong district, the company said in a statement on its Chinese-language website.

The plan is meant to optimise the company's manufacturing resources in China, it said.

Intel, the world's largest semiconductor company, said it would keep its mainland China headquarters and a research and development facility in Shanghai.

Shanghai employees affected by the move will be offered the chance to relocate to Chengdu or to a factory now under construction in the northeastern port city of Dalian, Intel said.

Santa Clara, California-based Intel underscored its commitment to China by raising its investment in Intel China Ltd, its Shanghai-based investment holding company, by US$110 million (S$165.7 million) this year.

Intel's research centre in Beijing and its Intel Capital China Fund II will not be affected by the reorganisation, the company said.

Last month, Intel said it planned to cut up to 6,000 manufacturing jobs as the company struggles with souring personal computer demand that has left its factories operating at less than full capacity. The company recently reported a 90 per cent drop in fourth-quarter profit.

The earlier job cuts included closing three 'assembly test' facilities in Malaysia and the Philippines. Such plants are where chip makers send finished wafers to be sliced into separate chips, put into individual packages, and tested to make sure they work. -- AP