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STMicroelectronics Cautious on 2025 Outlook Amid Weak Q1 Forecast

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STMicroelectronics (STMicro), one of Europe’s leading semiconductor manufacturers, announced on Thursday that it is too early to provide full-year guidance for 2025, as market uncertainties and inventory corrections continue to weigh on its business. The company warned that sales would decline further in the first quarter, reflecting a prolonged downturn in key markets.

STMicro’s stock fell 6.8% to 22.18 euros by 1226 GMT, hitting its lowest level since June 2020. CEO Jean-Marc Chery told analysts that the company expects the first quarter to mark the low point for 2025 but refrained from offering a full-year outlook due to limited visibility in demand recovery.

The company forecast first-quarter revenue of $2.51 billion, a nearly 28% year-over-year drop, falling short of analysts’ expectations of $2.72 billion, according to LSEG’s IBES data. This follows an earlier warning in November about a steeper-than-usual seasonal revenue decline.

The broader semiconductor industry is facing headwinds, with Texas Instruments, a key competitor, also reporting weak first-quarter projections due to inventory buildup in the automotive and industrial sectors.

To manage the downturn, STMicro plans to significantly reduce production days across its fabrication plants, assembly, and test facilities. Finance chief Lorenzo Grandi stated that some manufacturing sites would undergo temporary closures in the first quarter, with additional reductions likely extending into the second quarter.

Despite these challenges, STMicro reported fourth-quarter net income of $341 million, exceeding analysts’ estimates of $326 million. Strong performance in personal electronics partially offset declining industrial sector revenues.

For 2025, the company plans to scale back capital expenditures, targeting an investment of $2 billion to $2.3 billion, compared to $2.53 billion in 2024 and $4 billion in 2023.

 

ASML CEO Discusses Positive Impact of DeepSeek AI Launch on Chip Demand

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Christophe Fouquet, CEO of ASML, shared his perspective on the growing influence of AI technologies, such as China’s DeepSeek, on the global chip market. He emphasized that efficient AI models are ultimately a positive force for the semiconductor industry, countering the perception that AI spending is primarily driven by large-scale investments from tech giants like Google, Meta, and Microsoft. These companies are pouring billions into building advanced data centers, but according to Fouquet, the actual demand for chips driven by this sector remains relatively small.

Fouquet argued that the broader chip demand will come from the integration of AI into various consumer and industrial applications. He highlighted examples, such as AI-enabled phones, cars, and robotics, noting that for these products to reach mass adoption, the cost of the chips must be affordable. If the cost of chips remains high, only a small number of expensive units would be sold, limiting widespread access to AI technology.

When discussing the recent launch of DeepSeek’s AI product, which had a significant impact on tech stock prices, Fouquet remained optimistic, stating that anything that helps drive down costs is beneficial for ASML in the long run. While the potential of DeepSeek’s technology remains uncertain, he believes that cost reduction is key to enabling AI to be more accessible to a wider audience.

Analyst Sara Russo from Bernstein agreed with Fouquet’s viewpoint but noted that the effects of DeepSeek’s launch are still unfolding. She pointed out that ASML’s role as a supplier will depend on how AI applications evolve and influence chip demand, as well as the needs of chip manufacturers.

 

Renesas to Cut Less Than 5% of Global Workforce Amid Sluggish Chip Demand

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Renesas Electronics, a Japanese chipmaker specializing in automotive semiconductors, has announced plans to reduce its global workforce by less than 5%, which translates to fewer than 1,000 jobs. The decision comes as the company faces weaker-than-expected demand for its chips. Renesas, whose clients include major automakers Toyota and Nissan, also revealed that it would cancel planned salary increases for employees, including executives, scheduled for this spring.

Although the company did not specify the exact number of job cuts, it stated that the layoffs were aimed at improving its ability to execute its long-term growth strategy, particularly in light of ongoing market softness. Renesas is known for its automotive chips but is also working to diversify its business. In February, the company announced plans to acquire electronics design firm Altium for $5.9 billion as part of its efforts to broaden its portfolio.

Renesas’ shares dropped by 3% during Tokyo trading on Wednesday, reflecting investor concerns over the company’s response to the current market conditions.