STMicroelectronics NV ADR RegS (STM.US) continues to decline in performance, the Italian government intends to replace the CEO.

The simulation chip giant STMicroelectronics NV ADR RegS (STM.US), led by the French and Italian governments, is facing a high-level personnel shake-up. According to sources familiar with the matter who spoke to the media, the Italian government plans to dismiss the current leader of STMicroelectronics NV ADR RegS, current CEO Jean-Marc Chery, citing poor performance and long-term underperformance in the secondary market as core reasons. As of 9:09 am Paris time, the company's stock price dropped 2.1% on the Paris stock exchange, hitting an intraday low. STMicroelectronics NV ADR RegS's stock price in pre-market trading in the US also fell nearly 2%. This personnel shake-up comes at a time of global winter in the analog chip industry. The company's management previously described 2024 as the "most difficult year for the analog chip industry in decades," and its revenue forecast for the first quarter of this year was significantly below analysts' expectations, with operating profit shrinking significantly since 2023. A Bloomberg report earlier mentioned that due to sustained weak demand, the company plans to cut 3,000 jobs. Over the past 12 months, STMicroelectronics NV ADR RegS's stock price has fallen by as much as 37%, while in comparison, the Philadelphia Semiconductor Index, although volatile in the past 12 months, has seen a 10% increase. Although the Italian Ministry of Finance has initiated the dismissal process, officials admit there is a lack of mechanisms to facilitate a change in management, including a lack of tools to introduce replacements. This issue is expected to escalate to diplomatic-level discussions between the two governments. As of the time of writing, STMicroelectronics NV ADR RegS and the French Ministry of Industry have not responded to requests for comments, and the Italian Ministry of Finance has also not responded to the media. Established in 1987 as a multinational corporation under the leadership of the Italian SGS Microelettronica and French Thomson Semiconductor, STMicroelectronics NV ADR RegS is now a core semiconductor supplier for American tech giants like Apple Inc., Tesla, Inc., and others. The French newspaper "Les Echos" first disclosed this news, revealing the governance challenges facing the European semiconductor industry in the context of global competition and political pressure from companies like GEO Group Inc. STMicroelectronics NV ADR RegS primarily designs, develops, manufactures, and sells a variety of integrated circuit products, including microcontrollers and embedded processors (such as the widely used STM32 series in industries, automotive, and IoT), analog and mixed-signal chips (used in 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 chips for automotive and industrial electronics. These chips are widely used in various fields such as automotive, industrial, consumer electronics, and IoT. Many analog chip manufacturers focused on industries and electric vehicles, including STMicroelectronics NV ADR RegS, Analog Devices, Inc., and Texas Instruments Incorporated, have been experiencing continuous poor performance since 2023. Their revenue has been severely hit due to customer inventory surplus, a slowdown in customer orders, and a sharp shortage of analog chips after the COVID-19 pandemic, which has led industrial customers to accelerate stockpiling inventory. Furthermore, the sluggish demand trend in the electric vehicle and industrial manufacturing sectors is difficult to alleviate. Under long-term inventory accumulation and in the macroeconomic environment of high interest rates maintained by the Federal Reserve since 2023, industrial manufacturing demand and global electric vehicle demand have significantly cooled down. In addition, the gradual withdrawal of government subsidies related to electric vehicles globally has further weakened demand. The good news is that artificial intelligence (AI) is gradually being integrated into STMicroelectronics NV ADR RegS' business with a comprehensive focus on the automotive and industrial sectors, driving innovation in production technology and hardware deployment in these two major fields. Since the second half of 2024, this has led to a continuous recovery in demand, and downstream inventory reduction has been continuously boosting demand to break free from the "sluggish period". Especially in the electric vehicle chip sector, AI is not only applied to autonomous driving and advanced driver-assistance systems (ADAS) but also used to optimize production manufacturing and in-car entertainment experiences. In the industrial manufacturing sector, AI is widely used for smart manufacturing, predictive maintenance, and automation control.