Losing support from the Italian government, ST Semiconductor (STM.US) introduced a number of cost reduction reforms

The Zhitong Finance App learned that European chipmaker ST Semiconductors (STM.US) announced a number of measures aimed at adjusting its manufacturing layout and cutting costs. Previously, the company's CEO Jean-Marc Chéry's performance came under increasing pressure.

After the news was announced, the company's stock price fell nearly 7% in pre-market trading.

The French-Italian joint venture semiconductor company said it will focus on improving efficiency and automation, and using artificial intelligence to strengthen its investment in key technology research and development fields such as design, as well as large-scale assets in advanced European manufacturing.

The company added that planned investments for the 2025, 2026, and 2027 fiscal years will focus on advanced manufacturing infrastructure and technology research and development for 300 mm silicon wafers and 200 mm silicon carbide.

Additionally, STMicroelectronics said it is expected that about 2,800 employees will voluntarily leave their jobs in addition to normal turnover. The company expects to save “hundreds of millions” of dollars by the end of 2027.

“The manufacturing layout adjustments announced today will prepare our strategic assets in Europe for the future integrated equipment manufacturer model and improve our ability to innovate faster to benefit all stakeholders,” Chéry said in a statement. “While focusing on advanced manufacturing infrastructure and mainstream technology, we will continue to utilize all of our existing plants and redefine our mission for some of them to support their long-term success.”

Chéry added that the company's operations in Italy and France “will remain at the core of our global operations”.

These measures came at a time when the Italian government withdrew support for Chéry due to “poor performance”.

Tensions between STMicroelectronics and the Italian government, which holds 27.5% of the company's shares, intensified after the company declined to include Italian government official Marcello Sala on its supervisory board. Last month, it was reported that Sala could join the Supervisory Board with the purpose of overseeing and advising the Board.

In connection with this, ST's board of directors said on Thursday that they have confidence in Chéry and the rest of the management team.

STMicroelectronics is also co-owned by the French government, which also holds 27.5% of the European semiconductor company's shares. This analog chip supplier is a joint venture between France and Italy, the result of the merger of two state-owned companies in 1987.

The company is scheduled to hold its annual shareholders' meeting on May 28.