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GENEVA - STMicroelectronics N.V. (NYSE: STM), a global semiconductor leader with annual revenue of $13.27 billion, has announced a comprehensive program to revamp its manufacturing operations and reduce its global cost base. This initiative is part of the company's strategy to enhance its competitiveness and secure its position as a leading integrated device manufacturer. According to InvestingPro data, STM maintains a strong financial foundation with more cash than debt on its balance sheet and a healthy current ratio of 3.11x.
The company intends to focus its investments over the fiscal years 2025, 2026, and 2027 on advanced manufacturing infrastructure, including 300mm silicon and 200mm silicon carbide wafer fabs, as well as technology R&D. These investments are aimed at benefiting customers worldwide and are expected to result in annual cost savings in the high triple-digit million-dollar range by the end of 2027.
As part of the program, STMicroelectronics anticipates that up to 2,800 employees will voluntarily depart the company globally over the next three years, in addition to normal attrition.
President and CEO Jean-Marc Chery emphasized the plan's focus on strategic assets in Europe, stating, "The reshaping of our manufacturing footprint announced today will future proof our Integrated Device Manufacturer model with strategic assets in Europe and improve our ability to innovate even faster, benefitting all our stakeholders."
In Italy, the Agrate 300mm fab is set to double its capacity to 4,000 wafers per week by 2027, with potential expansions to increase capacity further based on market conditions. The 200mm fab at Agrate will shift its focus to MEMS. Meanwhile, the Crolles 300mm fab in France will be the core of the company's digital products ecosystem, with a capacity increase planned for 2027 and additional expansions possible.
The Catania site in Italy will continue as a center of excellence for power semiconductor devices, with a new Silicon Carbide Campus slated to start producing 200mm wafers in Q4 2025. Other sites, including Rousset and Tours in France and Ang Mo Kio in Singapore, will also undergo optimizations to maximize efficiency and technological differentiation.
The company's workforce and skill set requirements will evolve with these changes, shifting from manual tasks to a focus on process control, automation, and design. STMicroelectronics commits to managing this transition responsibly and through voluntary measures.
This announcement is based on a press release statement from STMicroelectronics. The company's ongoing efforts to innovate and scale up its operations aim to meet the rapidly changing demands of the semiconductor industry and to maintain its leadership in the global market.
In other recent news, STMicroelectronics has announced a joint development agreement with Innoscience to enhance gallium nitride (GaN) power solutions, aiming to improve technology for various applications such as consumer electronics and automotive systems. This collaboration will allow Innoscience to utilize ST's manufacturing capacity in Europe, while ST gains access to Innoscience's facilities in China. Additionally, STMicroelectronics is collaborating with Amazon's AWS to introduce a new AI chip designed for data centers, focusing on improving speed and reducing power consumption. In terms of company leadership, Maurizio Tamagnini has resigned from STMicroelectronics' Supervisory Board, though a successor has not yet been named.
On the financial front, Jefferies has upgraded STMicroelectronics' stock rating from Hold to Buy, raising the price target to EUR 34.00, citing expected growth driven by technological advancements and a rebound in industrial demand. Conversely, BofA Securities downgraded the stock from Buy to Neutral, lowering the price target to EUR 23.00 due to challenging market conditions and a lack of clear growth catalysts. Despite the downgrade, BofA acknowledges potential uplift from a cyclical improvement anticipated in the latter half of 2025. These developments reflect the ongoing dynamics within the semiconductor industry and STMicroelectronics' strategic positioning in response to market demands.
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