Italy’s government is reportedly seeking a replacement for Jean-Marc Chéry, the CEO of STMicroelectronics NV, the Franco-Italian chipmaking joint venture, citing concerns over the company’s performance. This development comes as the semiconductor industry faces significant headwinds, and STMicroelectronics has struggled to keep pace with its competitors.
Sources familiar with the matter, who requested anonymity due to the sensitive nature of the discussions, informed Bloomberg that the Italian government deems Chéry’s performance insufficient given the current challenging market conditions. The news sent STMicroelectronics’ shares tumbling by as much as 3% in Paris trading. This push for new leadership arrives at a crucial moment for the company, whose stock performance has significantly lagged behind its industry peers in recent years.
Over the past five years, STMicroelectronics’ stock has yielded a total return of approximately 5%. This pales in comparison to the Euronext Paris CAC Technology Index’s return of roughly 22% and the Philadelphia Stock Exchange Semiconductor Index’s staggering 200% return over the same period.
STMicroelectronics, a key supplier of chips for automobiles and various other products, has been grappling with a slump in demand for industrial and automotive semiconductors. In January, the company characterized 2024 as one of the most challenging years for the industry in decades and issued a forecast that fell short of analyst expectations. Subsequently, Bloomberg reported that STMicroelectronics was considering cutting as many as 3,000 jobs in response to the persistent decline in demand.
The Italian government’s desire for change is complicated by the fact that they may lack the necessary leverage to unilaterally enforce a leadership change. The decision regarding Chéry’s future is expected to be a topic of discussion between the Italian and French governments, which collectively hold a 27.8% stake in STMicroelectronics. Notably, Chéry was re-elected for a three-year term in May of the previous year.
Both Italy and France view STMicroelectronics, formed in 1987 through the merger of their respective state-owned chipmakers, as a strategically important enterprise. The company boasts a prestigious client roster that includes industry giants such as Apple Inc. and Tesla Inc.
As of now, both the Italian Treasury and STMicroelectronics have declined to comment on the situation. A representative for the French industry ministry could not be immediately reached for comment. French newspaper Les Echos was the first to report on this developing story. The outcome of the discussions between the Italian and French governments will undoubtedly have a significant impact on the future direction of STMicroelectronics.
