Chipmaker STMicro makes first loss in over a decade, hit by restructuring costs

By Nathan Vifflin

AMSTERDAM (Reuters) -STMicroelectronics reported a second-quarter loss on Thursday, its first in more than a decade, underperforming market expectations as it was hit by restructuring costs.

The company's shares fell 11% in early trade, on track for their worst day since July last year.

The Franco-Italian chipmaker, which makes power chips for Tesla's drivetrains and eSim modules for Apple's iPhones, posted a loss of $133 million for the quarter, missing the average $56.2 million profit analysts expected in an LSEG poll.

The operating loss included a $190 million impairment, restructuring charges and other costs, STMicro said in a statement. Without the restructuring and impairment costs, profits would have reached $57 million, the company added.

STMicro's heavy reliance on in-house manufacturing, representing about 80% of sales, has burdened it with underused factories and high staff costs when the market slows, unlike rivals Infineon and NXP that use more contract manufacturing, analysts say.

Chipmakers exposed to the struggling automotive, industrial, and consumer chip markets such as STMicro, Texas Instruments, or NXP have faced a sales slump, hit by low demand, high inventories, and geopolitical disruptions.

STMicro, one of Europe's largest chipmakers, unveiled a cost-cutting plan last year to restructure its manufacturing facilities and save hundreds of millions of dollars by 2027.

The plans, which included cutting 5,000 jobs in France and Italy over the next three years, started a spat between the French and Italian governments, who jointly own a stake of 27.5%in the firm.

STMicro's Chief Executive Jean-Marc Chery defended his plan after the Italian government sought to oust him and accused the management of insider trading.

STMicro has not provided guidance for the full year of 2025.

In June, the company said it saw the early signs of an upcycle, or a period of increased market demand, which would allow it to achieve its second-quarter revenue goal of $2.71 billion.

Revenue rose to $2.76 billion from $2.52 billion in the second quarter, ahead of that target. STMicro said it is now expecting revenue in the third-quarter to reach $3.17 billion, ahead of analysts expectations of $3.10 billion.

(Reporting by Nathan Vifflin in Amsterdam; Editing by Matt Scuffham and Clarence Fernandez)