STMicroelectronics plans to reduce its workforce by 5,000 employees over the next three years as part of its ongoing cost-cutting strategy, according to CEO Jean-Marc Chery. The downsizing includes 2,800 job cuts previously announced, with the remaining reductions expected through attrition and voluntary departures.
In April, STMicroelectronics reported margin pressure in the first quarter of 2025, with revenues falling 27.3 percent year-over-year to $2.52 billion. The decline in sales to both OEMs (down 25.7 percent) and distributors (down 31.2 percent) weighed heavily on financial performance.
Gross profit dropped 41.7 percent to $841 million, as gross margin fell to 33.4 percent, down 830 basis points from a year ago. The margin decline was driven by an unfavorable product mix, increased unused capacity charges, and lower selling prices.
Operating income plummeted 99.5 percent to just $3 million, pushing operating margin down to 0.1 percent, compared to 15.9 percent in the same quarter last year. The collapse in profitability underscores severe margin pressure amid weakening demand and pricing headwinds.
The Franco-Italian chipmaker, which is jointly owned by the Italian and French governments through a 27.5 percent stake, faces pressure from a prolonged market downturn in the semiconductor sector. As part of its restructuring plan unveiled in late 2023, STMicro aims to save several hundred million euros by 2027 through workforce optimization and early retirements, Reuters news report said.
Talks with governments and unions are ongoing, particularly in Italy, where resistance to the job cuts is strongest. Italian unions have condemned the planned 1,200 redundancies at the Agrate plant in Lombardy as “unacceptable” and are seeking urgent dialogue with the government.
Despite the workforce reduction, Chery hinted at a potential market recovery later this year. Investor sentiment responded positively, with STMicro shares jumping 11.1 percent — the biggest single-day gain since March 2020.
TelecomLead.com News Desk
