Whither STMicroelectronics after Annus Horribilis?
By Bolaji Ojo
What’s at stake:
STMicroelectronics has had an interim revenue goal of $20 billion in focus for some time. It had hoped to reach this number quickly after clocking record sales of $17.3 billion in 2023. The company concedes this objective may not be achievable until the end of the decade due to a drastic sales slump in 2024 and amidst fears this will continue at least through 2025. What will happen to manufacturing plans, capex, R&D, and the workforce as the company struggles to climb back uphill?
STMicroelectronics NV had its plans nicely laid out. It was going to become a $20 billion semiconductor behemoth by mid-decade and march aggressively towards even higher revenue, larger operating margins, and much fatter profits by 2030.
Halfway through the decade, though, ST’s management, bewildered, is headed back to the drawing board. The lofty plans are in tatters, shredded by massive disruptions in several key markets, including automotive, its largest segment, industrial and personal electronics. The disruptions have forced ST to push out the timeline for its $20 billion revenue goal to 2030, a target that even now appears doubtful.
How Europe’s second-largest semiconductor company navigates its way through the debris of its shattered ambitions over the next years will determine whether it will be anywhere close to its sales and margins objectives by the end of the decade. Manufacturing plans, R&D, capital expenditure, product development, investments, and product portfolios must be overhauled, some even pruned. Expansion goals for new markets may have to be curtailed due to reduced cash flow and some senior executives may be shown the door, their briefs merged with those of survivors’.
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