Chipmaker STMicroelectronics Weighs Significant Job Cuts Amid Slumping Demand
The industrial and automotive sectors are experiencing a prolonged downturn, and STMicroelectronics NV, a Franco-Italian chipmaker, is considering a drastic measure to stay afloat: reducing its workforce by up to 6% through early retirements and attrition. This move, which could affect 2,000 to 3,000 workers in Italy and France, is still under review and may be announced as early as next month.
A Strategic Enterprise Faces Uncertainty
STMicroelectronics, formed in 1987 through the merger of France and Italy’s state-owned chipmakers, is a vital enterprise for both countries. With over 50,000 employees, it supplies legacy chips to prominent companies like Apple Inc. and Tesla Inc. However, the company’s share price has plummeted by more than 45% in the last 12 months, reflecting the industry’s struggles.
Cost-Cutting Measures Underway
To mitigate the impact of the demand slump, STMicroelectronics is planning an early retirement program for some workers. Chief Executive Officer Jean-Marc Chery announced the plan on an earnings call, emphasizing that it would be based on voluntary departures. The company aims to engage in constructive dialogue with employee representatives in the coming weeks.
Government Intervention
The Italian government, which holds a 27.5% stake in the company alongside France, is seeking to minimize the restructuring’s impact on the Italian workforce. Representatives from the French Finance Ministry and Italian Industry Ministry declined to comment on the matter.
Industry-Wide Challenges
STMicroelectronics is not alone in its struggles. Competitor Texas Instruments Inc. recently provided a disappointing estimate for the current period, citing sluggish demand and higher manufacturing costs. The Geneva-based company has repeatedly scaled down its financial ambitions in recent periods, and its share price rose 1.5% to €21.55 in Paris trading following the announcement.
A Challenging Road Ahead
As the company navigates this difficult period, it remains to be seen how the proposed job cuts will affect its operations and employees. One thing is certain: STMicroelectronics must adapt to the shifting landscape of the industrial and automotive sectors to remain competitive.
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