STMicroelectronics' performance continues to be sluggish, and the Italian government wants to replace the CEO

According to the Zhitong Finance APP, STMicroelectronics (STM.US), a semiconductor giant established under the leadership of the French and Italian governments, is facing a shake-up in its upper management. Sources familiar with the matter revealed to the media that the Italian government plans to dismiss the current leader of STMicroelectronics, CEO Jean-Marc Chery, citing underperformance in both results and secondary market prices as the core reasons. As of 9:09 AM Paris time, the company's stock price fell by 2.1% on the Paris Stock Exchange, hitting an intraday low. The stock price of STMicroelectronics also dropped nearly 2% in pre-market trading in the U.S.

This personnel upheaval comes amid a global downturn in the semiconductor industry. The company's management had previously characterized 2024 as "the most challenging year for the semiconductor industry in decades," with the first-quarter revenue forecast released in January significantly below analysts' expectations, and operating profits have continued to shrink substantially since 2023.

Earlier reports from Bloomberg indicated that due to persistently weak demand, the company plans to lay off 3,000 employees. Over the past 12 months, STMicroelectronics' stock price has plummeted by as much as 37%, while the Philadelphia Semiconductor Index, despite significant volatility, has risen by 10% over the same period.

Although the Italian Ministry of Finance has initiated the dismissal process, officials admit that there is a lack of ready mechanisms to facilitate the management transition, specifically the tools to introduce replacements. This issue is expected to escalate into diplomatic-level consultations between the two governments. As of the time of publication, neither STMicroelectronics nor the French Ministry of Industry has responded to requests for comments, and the Italian Ministry of Finance has also not responded to the media.

Founded in 1987, this multinational company was formed through the merger of Italy's SGS Microelettronica and France's Thomson Semiconductors under the leadership of the Italian government, and it is now a core semiconductor supplier for major U.S. tech giants such as Apple and Tesla. The French newspaper Les Echos was the first to report this news, revealing the governance dilemmas faced by the European semiconductor supply chain amid global competition and geopolitical tensions.

STMicroelectronics primarily designs, develops, manufactures, and sells various integrated circuit products, with its product line covering: microcontrollers and embedded processors (such as the STM32 series widely used in industrial, automotive, and IoT applications), analog and mixed-signal chips (for power management, data conversion, sensor interfaces, etc.), power management and power conversion chips, MEMS sensors (used in motion, environmental monitoring, and medical devices), as well as specialized chip products for automotive and industrial electronics. These chip products manufactured by STMicroelectronics are widely used in various fields, including automotive, industrial, consumer electronics, and IoT.

Many analog chip manufacturers focusing on the industrial sector and electric vehicle market, including STMicroelectronics, Analog Devices, and Texas Instruments, have experienced continued poor performance since 2023. Their revenue has been severely impacted by clients' excess inventory, with order volumes from clients slowing across the board. The sharp shortage of analog chips following the COVID-19 pandemic led industrial clients to accelerate inventory accumulation, and more importantly, the demand for electric vehicles and industrial manufacturing remains weak and difficult to alleviate.

Under the long-term accumulation of excess inventory and in the macro environment of sustained high interest rates maintained by the Federal Reserve, related demand in the industrial manufacturing sector and global electric vehicle demand has significantly cooled since 2023. Additionally, the gradual withdrawal of government subsidies related to electric vehicles worldwide has further weakened electric vehicle demand The good news is that artificial intelligence (AI) is gradually integrating into STMicroelectronics' business, focusing on the automotive and industrial sectors, driving innovation in production technology and hardware deployment transformation. Since the second half of 2024, this has led to a continuous recovery in demand, while downstream inventory reduction is also helping demand escape the "sluggish period." Especially in the electric vehicle chip sector, AI is not only applied in autonomous driving and advanced driver-assistance systems (ADAS) but is also used to optimize production manufacturing and in-car entertainment experiences. In the industrial manufacturing sector, AI is widely used in smart manufacturing, predictive maintenance, and automated control