European semiconductor giant STMicroelectronics is navigating turbulent waters as it grapples with declining sales, workforce reductions, and growing tensions with the Italian government. According to a report by The Wall Street Journal, the company plans to cut 2,800 jobs globally by 2027 in an effort to streamline operations and improve financial performance after months of sluggish demand.
The company has emphasized that the job cuts will be implemented through voluntary measures, with negotiations underway with employee representatives. The move reflects broader headwinds in the semiconductor industry, especially in sectors such as automotive and industrial electronics, where STMicroelectronics has significant exposure.
At the same time, STMicroelectronics is facing rising political scrutiny in Italy, one of its key markets and production bases. As reported by Reuters, Italy’s Economy Minister Giancarlo Giorgetti voiced strong opposition to the current management, particularly CEO Jean-Marc Chery, accusing the leadership of selling shares just before the release of disappointing earnings. These allegations have triggered concerns over potential insider trading.
In a swift response, STMicroelectronics’ supervisory board issued a statement defending its executives, denying any wrongdoing and reiterating full support for Chery. The board also reaffirmed its confidence in the company’s strategic direction, despite the public criticism from the Italian government.
The controversy deepened as Italy nominated Marcello Sala, a senior official from the economy ministry, to STMicroelectronics’ supervisory board. According to Reuters, this move has faced internal pushback, suggesting a growing rift between the company and state stakeholders.
Despite the leadership drama, STMicroelectronics is doubling down on its commitment to Italy. The company reaffirmed plans to expand its production capacity at its Agrate (Lombardy) and Catania (Sicily) sites, with the goal of doubling output in Agrate by 2027. These investments signal that, even amid controversy, STMicroelectronics views Italy as central to its long-term manufacturing strategy.
The company’s financials paint a sobering picture. In its Q4 2024 earnings report, STMicroelectronics described the year as one of the most difficult for the industries it serves in decades. The company was hit especially hard in the automotive and industrial sectors, key revenue streams for the chipmaker.
Looking ahead, the forecast for Q1 2025 indicates continued weakness. STMicroelectronics expects a 27.6% year-over-year revenue drop and a 24.4% decline from the previous quarter, underscoring ongoing demand challenges.
As STMicroelectronics battles on multiple fronts—from workforce restructuring and softening demand to political pressure and public scrutiny—the next few years will be critical. With major investment plans still on the table, the company appears determined to weather the storm. But the unfolding tensions with the Italian government and the mounting financial headwinds suggest the road ahead will not be easy for Europe’s semiconductor heavyweight.