Thousands Of STMicro Layoffs Near After Gloom Outlook & Chip Slump

A day after STMicroelectronics—one of Europe’s largest chipmakers—said that 2024 was one of the worst years for the industry and forecasted first-quarter revenue below the Bloomberg Consensus estimates, the company is reportedly planning to cut thousands of jobs.

Bloomberg cited sources close to the Franco-Italian chipmaker that say about 6% of the workforce could be slashed through early retirements and attrition amid a prolonged downturn in auto and industrial sectors.

Here’s more from the report:

The job cuts under discussion, which could be announced as soon as next month, are in the range of 2,000 to 3,000 workers and will affect its operations in both Italy and France, according to the people, who asked not to be identified because the information isn’t public. The decision isn’t final and the scale of the reductions is still under review, the people added.

The Italian government, which together with France holds a 27.5% stake in the company, is seeking to limit the impact of the restructuring on the Italian workforce, the people said.

A spokesperson for STMicro confirmed to the media outlet that workforce restructurings were ahead:

„In the coming weeks, we will start engaging a constructive dialog with employee representatives around end of career support programs, built on a voluntary basis, including early retirement.”

On Thursday, CEO Jean-Marc Chery told analysts that providing a framework for full-year guidance would be difficult because of poor visibility and elevated inventory correction among customers. He added, „We think its fair to consider Q1 as the low point of 2025.”

Goldman’s Alexander Duval, James Saunders, and Anant Jakhar provided clients this morning with key takeaways from STMicro’s earnings report:

1. STM expects meaningfully sub-seasonal growth in 1Q25, with limited visibility into timelines for a recovery,

2. The company’s revenues in automotive face several headwinds in 2025, including company/customer specific factors, with sales likely to decline yoy, in our view,

3. Industrial semis market demand remains soft, with excess channel inventory still a headwind to any potential sales recovery, and

4. We remain cautious on near-term gross margins given high unloading charges and persistent excess inventory. Remain Neutral.

The analysts were „Neutral” rated on STMicro with their 12-month price targets of €24.5 / ADR $25.5 (vs €27 / ADR $28.5 prior) based a 6x CY26 (rolled forward vs 6x 2HCY25E+1HCY26E prior) EV/EBITDA multiple.

Slippery slope…

STMicro also told analysts that some production across its fabs, assembly, and test plants will be idle in the coming days.

„We also have a plan for temporary closing of many of our fabs during this quarter. Our expectation is that in Q2, we will continue … to have a significant amount in terms of unloading,” finance chief Lorenzo Grandi said.

Competitors like Texas Instruments also provided investors with forecasted first-quarter profit below Bloomberg Consensus estimates, citing sluggish demand and higher manufacturing costs.

Meanwhile, data center chip companies have been buoyed by the Stargate AI infrastructure project and robust Capex spending projections by Mag7 companies.

However, DeepSeek’s new AI models unveiled at the start of the week put all that Capex spending into question.