Intel’s Costa Rica A&T Plant: Rise, Shift, and 2025 Closure

Name: Intel's 30 Years in Costa Rica
Uploaded: 2026-05-21T23:00:07+00:00
Duration: 22 min 5 s
Channel: Asianometry
Description: Summary and key takeaways on Intel's 30 Years in Costa Rica: Summary & Key Takeaways, covering Historical Context After a 1980s debt crisis, Costa Rica

Asianometry

May 21, 2026

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22 min video

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YouTube video ID: AU1iHfUdkBU

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After a 1980s debt crisis, Costa Rica reoriented its economy toward market‑oriented policies and free‑trade zones. The country’s investment promotion agency, CINDE, shifted its focus from textiles to electronics in 1993, positioning the nation as an attractive destination for foreign direct investment.

Intel’s Entry

In 1996 Intel announced a new assembly and test (A&T) site to keep any single country’s asset concentration below 30 %. Although Mexico offered better financial terms, high inflation and mandatory union rules made it less appealing. Costa Rica won the bid because of its political stability, transparent legal system, and a government that responded quickly to Intel’s needs. The decision turned the country from an “afterthought” into a strategic foothold for Intel’s global manufacturing network.

Operational Impact

The A6/T6 plant opened in 1997 as a “clone copy” of Intel’s facilities in Malaysia and China. Within three years the plant accounted for roughly 40 % of Costa Rica’s total exports, and by 2013 Intel contributed about 20 % of the nation’s export value. The facility sourced electricity, maintenance services, and nitrogen locally, while creating a technical workforce of more than 2,000 employees.

Strategic Shifts

A sharp decline in the global PC market and Intel’s pivot toward mobile chips forced the 2014 shutdown of the A&T line, resulting in 1,500 layoffs and a shift to research and development. The COVID‑19 pandemic revived demand for chips, and Intel reopened the site in 2020 to pursue near‑shoring goals that reduce reliance on Southeast Asia. The 2023 US CHIPS Act, administered through the International Technology Security and Innovation Fund, identified Costa Rica as a partner, prompting a $1.2 billion investment in infrastructure and R&D.

Current Status

In July 2025 Intel announced a gradual closure of the A&T facility, with the final shutdown slated for 2026. The company will retain its R&D and administrative support centers in Costa Rica, preserving employment for over 2,000 staff members.

Assembly and Test Process

Wafer dicing – Silicon wafers are cut into 300–500 individual microprocessor dies.
Testing – A tester machine sends digital signals to each die to verify that specifications are met.
Packaging – The verified chips are sealed in plastic or ceramic packages for environmental protection.
Final testing – Packaged chips undergo a last performance check before shipment.

Because labor accounts for 25–30 % of total operating expenses, the A&T process is highly sensitive to local wage levels and productivity.

Takeaways

Intel selected Costa Rica in 1996 to diversify its assembly and test footprint, valuing political stability, legal transparency, and responsive government incentives.
The A6/T6 plant, opened in 1997, quickly became a major export driver, accounting for about 40 % of Costa Rica’s exports in 2000 and creating a technical workforce of over 2,000 employees.
A global PC downturn forced the 2014 shutdown of the A&T line, shifting the site to research and development while laying off 1,500 workers.
Pandemic‑driven demand and near‑shoring strategies prompted Intel to revive the facility in 2020, supported by the US CHIPS Act and a $1.2 billion investment in infrastructure and R&D.
Despite the announced gradual closure of the A&T operations by 2026, Intel will retain R&D and administrative functions in Costa Rica, preserving over 2,000 jobs.

Frequently Asked Questions

Why did Intel choose Costa Rica for its assembly and test facility in 1996?

Intel prioritized political stability, transparent legal frameworks, and a government that responded quickly to its requirements. These factors outweighed Mexico’s better financial terms, which were offset by high inflation and mandatory union rules, making Costa Rica the preferred location.

How does Intel’s Assembly and Test (A&T) process work?

The A&T process begins with wafer dicing, cutting silicon wafers into individual dies. Each die is then tested with a specialized machine, packaged in protective material, and subjected to a final performance test before shipment. Labor costs, representing 25–30 % of expenses, make the process sensitive to local wages.

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Full Transcript YouTube

In July 2025, Intel announced that they will be  
gradually closing their assembly 
and test site in Costa Rica.
End of an era. Intel has been in 
Costa Rica for almost 30 years.
That A&T factory was their only 
Latin American manufacturing site.
In 2000, nearly 40% of Costa Rica's 
exports were Intel microprocessors.  
They were a chip export giant! (Kinda)
In today's video, let us look back 
at Intel's tenure in Costa Rica.
## Beginnings
I have not mentioned Costa Rica before, 
so I think we are up for an introduction.
Costa Rica sits between Nicaragua 
and Panama on the isthmus connecting  
North and South America. To the 
east, we have the Caribbean Sea,  
which is part of the Atlantic Ocean. And to 
the west, there is of course the Pacific Ocean.
Size-wise, the country is a bit 
larger than Denmark and about 42%  
larger than Taiwan. The interior is 
mountainous, with large ranges in the  
region’s southeast. Rivers flow down 
from those mountains to the plains.
Today, the population is about 5 million 
people. Most of them live in the country’s  
urbanized Central Valley - which 
include the capital San Jose.
Costa Rica is Latin America's 
oldest democracy. In the 1500s,  
the country was a backwater colony in Spain’s 
American empire. Lacking silver, gold,  
or indigenous slaves, the resident colonists 
were poor, and most farmed their own land.
Costa Rica gained its independence 
from Spain in the 1800s.
Going into the first half of the 20th 
century, the country was a small,  
elite-dominated republic that 
mostly exported coffee and bananas.
In 1948, election disputes 
led to a brief civil war won  
by a coffee farmer turned political 
activist named José Figueres Ferrer.
Ferrer passed a new Constitution, nationalized  
the banks, and quite famously disbanded 
the military. For the next few decades,  
the Costa Rican economy continued to focus 
on agriculture and state-led spending.
But after a debt crisis in the 1980s brought 
on by excessive foreign currency borrowing,  
the government felt reform was necessary.
They passed policies that were more 
market oriented, set up free trade  
zones for tax-free import/export of goods, 
and sought major foreign corporate investors.
Foreign Direct Investment started 
to grow from about $60 million  
or so a year in the mid-1980s to a 
quarter of a billion a decade later.  
Companies like Motorola started building 
assembly plants there to make phones.
## Intel's New Factory
In 1995, Intel was firing on all 
cylinders - generating over $16  
billion in revenue and $3.6 billion in net income.
The booming PC industry was driving immense 
demand growth for CPUs. And since Intel allowed  
no one else to manufacture their CPUs, they 
had to build many new fabs to meet this demand.
In addition to their US fabs in California,  
Arizona, New Mexico and Oregon, they also 
had factories in Malaysia, Israel, Ireland,  
the Philippines, and the People's 
Republic of China. All were growing.
With sales continuing to surge, Intel 
needed yet more capacity. This combined  
with their desire to continue 
their global expansion led the  
decision to build a new assembly and test 
factory in either Latin America or Asia.
Assembly and Test refers to a series of steps 
done after the wafer is fabricated. First,  
we need to cut up the wafers to get 
300 to 500 microprocessor dies in them.
After that, each chip is tested. A sophisticated 
machine called a tester sends digital signals into  
the chip and measures the signals that the chip 
sends back. If they match spec, then it passes.
If it passes, then the chip is packaged into 
a plastic or ceramic housing for protection  
from the surrounding environment. After one 
final set of tests, the chip is ready to go.
Assembly and Test plants are not as pricey 
as front end wafer fabs, but nevertheless  
still represent a significant investment. If 
a wafer fab then cost about $1-1.5 billion,  
then the assembly and test factory might 
cost anywhere from $100 to 300 million.
Unlike with wafer fab, assembly and 
test remains rather labor intensive.  
Labor takes about 25-30% of 
the total operating cost,  
making it a key factor in determining 
the plant's economic viability.
## Getting On the List
So where should Intel put this 
assembly and test factory?
Early on in the process, Intel decided that it 
should expand to a new country. Their current  
overseas sites in Malaysia, Ireland, and 
so on were already at capacity limits.  
Intel also did not want more than 30% of 
their asset base in any single country.
The site selection team began with a list 
of 13 countries in Asia and Latin America.  
Each country was chosen for having some mix of a 
pro-business attitude, stable political regime,  
decent logistics and manufacturing lead-time, 
fast permitting, and good human capital.
In terms of Asia, the list had PRC, India, 
Indonesia, Korea, Singapore, Thailand, and Taiwan.
Then in Latin America, there was Argentina, 
Brazil, Chile, Costa Rica, Mexico,  
and Puerto Rico. At this point, Costa 
Rica was not seen as a major contender.  
They were only being considered in the 
first place almost as an afterthought.
The job of attracting FDI 
is handled by a nonprofit,  
non-political organization called the 
Costa Rican Investment Promotion Agency  
or CINDE - founded in 1982. Throughout the 
decade, they lobbied for mostly textile firms.
But by the late 1980s, Costa Rican labor costs 
had gotten too high to be competitive in that  
area. So in 1993, the agency shifted to 
lobbying electronics firms like Intel.
After two years of nothing happening, Intel 
finally responded in late 1995 - inviting CINDE  
to a meeting at their Santa Clara 
headquarters. A few months later,  
CINDE sent over a detailed investment 
package, which got them onto the list.
## Selecting Costa Rica
After selecting their basic list, 
Intel officials did a first round  
review - searching for any potential 
dealbreakers in their important criteria.
This cut things down to seven 
countries: Indonesia, Thailand,  
Brazil, Argentina, Chile, Costa Rica, and Mexico.
Then because Intel already had 
substantial facilities in Southeast Asia,  
Indonesia and Thailand were dropped from the list.
Argentina was also removed 
for undisclosed reasons.
So in the end, just the four Latin 
American countries made it to the  
shortlist. Now, it was time to do on-site visits.
For Intel's first trip in April 1996, 
CINDE arranged meetings with banks and  
accounting firms to discuss legal 
and financial transparency. Then  
with existing electronics manufacturers to 
discuss actual on-the-ground experiences.
CINDE also arranged a meeting with Costa 
Rica's then-president, José María Figueres.  
The president took a keen interest 
in a potential Intel investment,  
and assigned senior government officials 
to quickly respond to requests.
At the end of the visit, the four 
Intel VPs were honest about their  
biggest worry. Foreign Trade 
Minister Jose Rossi recalled:
> At the end of the visit, they 
diplomatically told us that while  
one day they might have something in Costa Rica,  
their project was too big ... [it] would 
be like putting a whale in a swimming pool.
Can Costa Rica's infrastructure 
capacity - power, air freight,  
and such - handle an Intel? Estimates 
found that a fully-laden assembly and  
testing plant would use 30% of the 
whole country's energy capacity.
In the same line, were there enough 
educated technical workers? Costa  
Rica's education system was rated as quite 
excellent, but there were gaps in English,  
physics, and chemistry. It 
wasn't semiconductor-ready.
Nevertheless, Intel let Costa 
Rica stay in the race. And slowly,  
other countries got dropped. Chile 
fell out because they had little  
experience in electronics manufacturing and 
the flights to and from there were not ideal.
And Brazil lost out due to its investment climate. 
The government was getting more pro-business  
and things were promising. However, interest 
rates remained high and the bureaucracy heavy.
So in the end, that left just 
Costa Rica and Mexico. Mexico  
offered a better financial package, 
lower energy prices, and free land.  
But the country - having recently exited a 
currency crisis - suffered high inflation.
And perhaps most damningly, Mexico had mandatory 
union rules. Mexican officials then offered  
to waive those rules just for Intel, which 
apparently gave the company the heebie-jeebies.
Not that Costa Rica didn't also offer benefits. 
The government built a water facility for  
Intel's exclusive use, expedited permit approval, 
granted an 8-year exemption on taxes with another  
50% discount for the four years afterwards and 
provided electricity at cost. But they said what  
was offered was no different from what was offered 
to other electronics companies of similar size.
Anyway. In November 13, 1996, Intel 
announced that it had chosen Costa  
Rica - feeling most comfortable with 
the country's political stability,  
legal institutions and economic 
openness and transparency.
Construction on the $300 million 
plant - called A6/T6 - began in  
late April 1997. President Figueres 
attended the groundbreaking ceremony.  
The plant's first site general manager, 
Cesar Quiason, gave remarks, saying:
> To appreciate the future is to 
remember the event taking place today,  
as today marks the beginning 
of a new era in Costa Rica
## Intel in Costa Rica: A6/T6
The plant was completed on time and 
began operating in November 1997.
By 1999, Intel had invested between $300 and 
$500 million into the 52-hectare facility.  
The factory sits about 15 kilometers 
west of San Jose and was a clone copy  
of its sister facilities in Malaysia 
and the People's Republic of China.
Intel's sheer size materially changed several  
headline macro-economic numbers. Costa 
Rica's total 1998 GDP was $13.6 billion.
So the Central Bank attributed over half  
of 1999 GDP growth - and 40% of 
total exports - to Intel alone.
A6/T6 initially assembled and tested about 
20% of Intel's Xeon server processors as  
well as its desktop Celeron and Pentium 
Pro microprocessors. (What, no Itaniums?)
In 2000, Intel added an engineering services 
group to Costa Rica - hiring about 100 specialized  
engineers to provide internal engineering 
support as well as software development.
Then in 2003, Intel announced a major 
facility expansion - investing $110  
million to add a third facility called 
CR3 to assemble and test chipsets.
These are chips on the motherboard that manage 
the flow of data between the CPU and its external  
components. They serve as the bridge through which 
the CPU communicates with the rest of the system.
## Jobs
In terms of job creation, A6/T6 
first phase directly created over  
2,200 jobs - reaching this number by 
mid-1999. CR3 added 600 more jobs.
The vast majority of the workers were local. 
Considering that the country's population at  
the time was 3.5 million and its total workforce 
was about 1.3 million, that is pretty significant.
Half of those workers were operators, a 
quarter were technicians, and the rest  
professionals. Costa Rican workers 
received training at Intel's plants  
in Arizona for their tasks - so that they 
can be as good as any other Intel worker.
Intel said that it paid wages higher than 
average for the Costa Rican manufacturing  
sector - about $615 per month compared 
to $406. But Intel also hired for more  
qualified, higher-earning workers 
so this shouldn't be surprising.
## Creating a Cluster
A major perk mentioned regarded 
Intel's suppliers moving to Costa Rica.
Intel had about 200 suppliers of varying size, 
with about 60 marked as being very important.  
It was initially estimated that 
these companies moving would bring  
over $500 million of investment, and 
maybe create a surrounding cluster.
There were a few wins. Intel's 
influence pushed FedEx, UPS,  
and other air freight companies to 
initiate regular cargo flights with  
the United States. Obviously, wafers and 
chips have be shipped in and out regularly.
Unfortunately, it turns out that many of 
Intel's suppliers hesitated to come - those  
who did only opening small service centers 
with few employees. Generally, they were  
hesitant to invest deeply into the country 
without another big anchor customer present.
Did Intel replace those foreign suppliers 
with local ones? With regards to the  
assembly/test factory, localization 
was limited. For one thing, the primary  
inputs for assembly and test are finished 
silicon wafers - which had to be imported.
With regards to other things, there were 
other issues. Potential local suppliers  
were often small or medium sized 
businesses, so they struggled to  
meet Intel's high manufacturing demands. For 
instance, the demand for 24/7 response time.
Thusly, the top three things that 
Intel's factory bought from the  
local ecosystem were electricity, 
maintenance services, and nitrogen.
## The Stamp of Approval
Perhaps the biggest intangible 
benefit was Intel putting Costa  
Rica on the map as a viable site for investment.
A 1999 survey found that 72% of respondents 
now considered Costa Rica a viable investment  
candidate thanks to Intel's decision. It 
was basically a big stamp of approval,  
and Intel encouraged CINDE to go 
out and find other "big fish".
CINDE tried to take advantage, 
launching a big campaign.  
This eventually brought Proctor & Gamble and 
Abbott Laboratories. Both multinationals set  
up major administrative hubs in Costa 
Rica and remain there to this day.
Unfortunately, the Asian Financial Crisis 
and the crash of the telecom bubble killed  
intriguing FDI opportunities with the hard-drive 
maker Seagate and telecom equipment-maker Lucent.
## The First Shutdown
After over a decade of operation, Intel 
decided to invest yet more into Costa Rica.
In 2011, Intel opened a new 
engineering design center,  
hiring 300 Costa Rican engineers and technicians 
for R&D of advanced hardware and chipsets. By now,  
the company had invested in $900 million total.
But then in the early 2010s, the 
whole PC market saw major downturns  
in demand - driven most likely by the 
red-hot boom in smartphones and tablets.
A downturn that the terrible Windows 8 could 
not reverse. With PC shipments cratering,  
Intel decided to pivot resources to 
mobile chips and the "Internet of Things".
In January 2014, they said they would lay 
off 5% of their workers as part of this  
pivot - targeting various offices across 
the United States, Spain and Malaysia.
Thus, Intel later announced that they 
will close the Costa Rica assembly and  
test facility - laying off 1,500 workers 
by the end of the year. The work would be  
consolidated to existing sites 
in China and Southeast Asia.
The company said this had nothing to 
do with the productivity of Costa Rican  
workers - adding that it would keep and even 
expand the area's engineering design services  
and R&D centers. By then, these offices 
employed about 1,200 people in total.
In the early 2010s, microprocessors remained 
Costa Rica's single biggest export item - about  
$2.4 billion worth or 20% of 2013 total 
exports. Those will eventually go to zero.
Fortunately, Costa Rica had since developed a 
strong cluster of medical devices manufacturing  
exports along with its agricultural staple exports 
of beef and bananas. They also retained strong  
tourism and business services sectors. So the 
loss of semiconductors wasn't a crippling one.
Intel and CINDE worked together to help 
the 1,500 laid-off workers find new jobs,  
opening a website to aggregate resumes. 
Considering that manufacturing turnover  
is usually pretty high, it seems 
most workers quickly found new jobs.
One possible upside of the Intel factory's closure 
was how it raised the proportion of goods Intel  
bought from domestic suppliers. Some of which 
can be deemed "higher value". For example,  
software development as well as R&D services 
like consulting and training. So you can say  
that the closure represented some 
kind of a healthy-ish transition.
## 2020 Revival
Then in 2019, the COVID pandemic hit. The world  
locked down and almost everyone (except 
"essential" personnel) had to go online.
This meant that everyone had to go out 
and buy a PC. And everyone got on Zoom  
calls. Now suddenly Intel needed all the 
PC and server chip capacity that it can  
get. They never left the Costa Rica campus, 
so the facility was apparently sitting there.
I also reckon Intel was concerned about 
having so much of its supply chain across  
the Pacific in southeast Asia and China. 
Moving some of that to Latin America can  
achieve "near-shoring" - shorter freight times 
while retaining somewhat cheaper labor costs.
So six years after the Costa Rica 
assembly and test plant first closed,  
Intel said it would invest about $350 
million to reopen the facility. Ileana  
Rojas, general manager of Intel Costa Rica said:
> The existing infrastructure, synergy with 
the test operations that already exist on-site,  
the talent, the free trade zone 
regime, and legal environment gave  
Intel a favorable option to start 
its assembly capacity in Costa Rica
The reopening will create 200 new jobs and 
operations will kick off in the second half  
of 2021. CINDE reported that the first 
exports started heading out in September.
As the "chip shortage" or so-called "chip 
crisis" developed, policy-makers desired a  
more global and secure semiconductor 
supply chain. So the US government  
explored potential partnerships with Costa 
Rica as a potential chip manufacturing hub.
In July 2023, the US identified Costa 
Rica as one of six partner countries  
to receive funds from its International 
Technology Security and Innovation Fund,  
a fund established by the US CHIPS Act to boost 
domestic semiconductor manufacturing and research.
Soon after, Intel Costa Rica announced 
another $1.2 billion in investments  
over the next two years to upgrade 
infrastructure and technical engineering.
That was in 2023. I think there was a 
lot of optimism in Costa Rica as late  
as October 2024 that it can benefit from 
what felt like a sustainable near-shoring  
and de-risking drive to build more semiconductor 
factories - maybe even a fab - in the country.
But a lot can change in two years. And 
unfortunately, things turned in a negative way.  
Intel since experienced massive downturns due 
COVID hangovers, an overextended expansion  
drive and AI GPUs taking spend share away from 
CPUs. For a while, they teetered on the brink.
After Lip Bu-tan - an American born in 
Malaysia - took over as CEO, he appeared to  
have decided that A&T was better off consolidated 
in Southeast Asia after all. Or on American soil.
## Conclusion
If the closure goes through, after 2026 Intel will
no longer have any assembly and 
test facilities in Latin America.
It is a little disappointing - considering 
how things on the manufacturing side seemed  
so promising in the early 2020s. But Intel's 
other Costa Rican operations will continue:
Their R&D center for testing and 
validating chip hardware and software;  
Plus their corporate HR/administrative 
support services center. Between those two,  
Intel employs over 2,000 Costa 
Ricans and those are great jobs.
And who knows. There is a big CPU sales surge 
thanks to the AI Agents boom. Maybe Intel will  
need the capacity again and postpone 
the factory's closure once more. After  
30 years in Costa Rica, Intel’s working 
relationship there remains super strong.

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Intel’s Entry

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Current Status

Assembly and Test Process

Takeaways

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Why did Intel choose Costa Rica for its assembly and test facility in 1996?

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