Intel Corp.'s decision to shutter its chip factory in Santa Clara, Calif., closes the books on Silicon Valley's history as the manufacturing hub of the U.S. technology industry.

"Intel is a sign of the times," said Risto Puhakka, president of VLSI Research Inc., a chip-industry research firm in California. "There are no incentives to have sizable manufacturing operations in Silicon Valley. The Valley is hugely focused on intellectual property and innovation, rather than on manufacturing."

The strip between San Francisco and San Jose -- once a major fruit-growing center -- was populated by the plants of Intel, Advanced Micro Devices Inc. and National Semiconductor Corp. starting in the 1960s. Those factories slowly became obsolete, and were replaced by plants in Texas, Oregon, Arizona, Utah, Germany and Asia.

Intel said last week it will close five older plants that employ as many as 6,000 people, including its last factory in Silicon Valley, as the world's biggest chipmaker copes with a worldwide recession.

Intel will shutter a factory at its headquarters in Santa Clara, a plant in Oregon, and assembly and test facilities in Malaysia and the Philippines. Some workers affected will be offered positions elsewhere in the company, Intel said.

Advanced Micro, located one exit up Highway 101 from Intel, has two plants in Dresden, Germany. AMD, Intel's only major competitor in microprocessors, moved production to Germany to take advantage of government tax breaks. The old AMD plant in Sunnyvale is owned by Spansion Inc., an AMD spinoff.

Slowing demand for PC chips has forced Intel to run its factories below capacity, making them less profitable. Last week, the company reported a 90 percent drop in fourth-quarter net income. Intel, founded in 1968, may struggle to turn a profit in the current period, CEO Paul Otellini told employees.

Many chip companies in Silicon Valley, such as Nvidia Corp., Altera Corp. and Xilinx Inc., don't actually make physical products, concentrating their efforts instead on designs that are manufactured in Asia.

"What's driving Silicon Valley is the research, development and marketing prowess of the companies here -- that will be the engine that drives us in the future," Patrick O'Malley, chief financial officer of Seagate Technology, the world's largest maker of hard- disk drives, said in an interview. "Manufacturing is leaving Silicon Valley."

Intel said the closures won't slow down a shift to more advanced manufacturing technologies. The company has its most modern plants in New Mexico, Oregon, Arizona, Israel and Ireland.