STMicro's First Loss in Over a Decade Sparks Restructuring Initiatives
STMicroelectronics reported its first quarterly loss in more than ten years, incurring a $190-million charge due to restructuring and impairments. The French-Italian chipmaker saw its shares plummet by 16.6%, mainly affected by its heavy reliance on in-house manufacturing and the slumping automotive and consumer chip markets.
STMicroelectronics has reported a second-quarter loss, the first in over a decade, largely due to a $190-million restructuring and impairment cost. This led to a 16.6% drop in shares, marking the chipmaker's largest single-day loss.
The company posted an operating loss of $133 million, failing to meet market expectations of a $56.2 million profit. Analysts note that the company's dependence on in-house manufacturing has been a liability during market slowdowns, affecting companies similarly situated in slumping sectors.
Despite the losses, CEO Jean-Marc Chery remains optimistic about future growth. However, geopolitical issues could pose challenges. Meanwhile, a cost-cutting plan involves shedding 5,000 jobs, causing tension between the French and Italian governments, who are partial stakeholders.
(With inputs from agencies.)
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