STMicroelectronics Slashes More Jobs Than Expected: What's Going Down?
STMicroelectronics to Reduce Workforce Beyond Initial Estimates
In a nutty nutty move that'll leave your panties in a wad, STMicroelectronics, the bloody big chip manufacturer, is letting go of more workers than we initially thought would see the door. With natural attrition taking its toll, an extra 2,000 souls will be bid adieu, as per the words of Jean-Marc Chery, Infineon's arch-nemesis and the big boss of STMicroelectronics, during an event hosted by BNP Paribas bank.
That's on top of the 2,800 job cuts announced only a few months ago, bringing the grand total to a jaw-dropping 5,000 employees on the chopping block. The Franco-Italian firm currently employs approximately 50,000 people - feelin' the squeeze now, ain't ya?
The company's been grappling with a slowdown in demand, particularly in the automotive sector. To cut costs and stay afloat, they've rolled out a cost-cutting program worth a hefty sum of hundreds of millions of euros. As part of these cost-cutting measures, they've decided to shutter some factories.
Barely a few hours before the job cuts were announced, STMicro CEO Chery said there were signs that the industry was on the up-and-up. "Since the start of the quarter, new orders have significantly exceeded current sales, which is a sign of a recovery."
Why the Axe is Falling
STMicroelectronics' decision to trim 5,000 jobs over the next three years is the result of some grim practices: cost-cutting and restructuring. The semiconductor industry's been facing a rough patch since late 2022, and STMicro's caught in the crossfire. Key factors driving the job cuts include:
- Pekeless Demand: The semiconductor market's been battered by a decrease in demand for consumer electronics and inventory overhangs, hurting suppliers like STMicroelectronics.
- Piteous Financials: STMicroelectronics' revenue is projected to tumble by 27.6% year-over- year in Q1 2025, contrasting sharply with its peak growth in 2021. This decline has led to shrinking margins, from 25% in 2022 to 12% in Q4 2024.
- Smart Shift: The job cuts are part of a broader strategy to keep margins stable and aim for €600 million in annual savings by 2027.
What This all Means for the Workforce and Operations
The job cuts will have various repercussions on STMicroelectronics' workforce and operations:
- Head Count Reduction: The company plans to shed 5,000 employees, with 2,800 through layoffs and 2,000 via natural attrition. That amounts to about 10% of its global workforce of around 50,000 people.
- Streamlined Operations: The restructuring aims to streamline operations and boost efficiency, potentially leading to leaner and more agile business units.
- Political and Social Turmoil: The job cuts have aroused political controversy, particularly in France and Italy, where the governments own a 27.5% stake in the company. Italy has pushed to limit the job cuts to fewer than 1,000 positions.
- Fiscally Frustrating: The cost-cutting measures are designed to ease financial pressures and stabilize profitability in this tough market environment.
Overall, the job cuts are part of a strategic reaction to the cyclical downturn in the semiconductor industry, targeting to keep competition high and financial stability intact. However, they also raise concerns about long-term vulnerabilities in the sector and potential impacts on local communities.
The Manufacture of other electrical equipment industry is facing a challenging period, with STMicroelectronics, a significant player, implementing cost-cutting and restructuring measures due to a decline in demand and shrinking margins. As part of this strategy, the company is planning to finance the savings by reducing its workforce by 5,000 employees over three years, impacting its global business operations and potentially leading to leaner, more agile units. This decision has sparked political controversy, particularly in countries where the company has substantial stakes, such as France and Italy.
