STMicroelectronics Reports Second Quarter Loss: Market Underwhelmed
STMicroelectronics reported a second-quarter loss, its first in over a decade, disappointing market expectations due to restructuring costs. The company’s shares plunged by 11% in early trading, marking their worst performance since the previous July.
The Franco-Italian chipmaker, known for manufacturing power chips for Tesla’s drivetrains and eSIM modules for Apple’s iPhones, posted a quarterly loss of $133 million. This figure starkly contrasted with the $56.2 million profit analysts had projected in an LSEG poll. The reported loss of $133 million included a $190 million impairment, restructuring costs, and other charges, as stated by STMicro in a release. Excluding these expenses, profits would have amounted to $57 million, the company confirmed.
STMicro’s heavy reliance on in-house manufacturing, accounting for approximately 80% of its sales, has left the company grappling with underutilized factories and elevated staff expenses during market slowdowns. In contrast, competitors like Infineon and NXP, which rely more on contract manufacturing, have been able to navigate these challenges more efficiently, as highlighted by analysts.
Chipmakers heavily exposed to struggling automotive, industrial, and consumer chip sectors, including STMicro, Texas Instruments, and NXP, have felt the sting of decreased sales due to low demand, excess inventories, and geopolitical disruptions.
STMicro, a major player in Europe’s chip industry, introduced a cost-saving strategy in the previous year aimed at restructuring its production facilities to realize hundreds of millions in savings by 2027. This initiative, involving the elimination of 5,000 positions in France and Italy over the next three years, triggered tensions between the French and Italian governments, who collectively hold a 27.5% stake in the company.
Despite facing backlash, STMicro’s CEO Jean-Marc Chery stood by the restructuring plan following attempts by the Italian government to remove him, alleging insider trading within the management.
The company refrained from offering financial guidance for the full year of 2025. However, in June, STMicro hinted at early signs of an upturn, anticipating achieving its revenue target of $2.71 billion for the second quarter. Actual revenues surpassed expectations, climbing from $2.52 billion to $2.76 billion in the same quarter. Looking ahead, STMicro anticipates third-quarter revenues to hit $3.17 billion, exceeding analysts’ consensus of $3.10 billion.
