France Said to Clash With STMicroelectronics Over Jobs, Strategy
2015-07-31 13:41:17.182 GMT
By Marie Mawad, Francois de Beaupuy and Helene Fouquet
(Bloomberg) -- STMicroelectronics NV and its French state
owner are headed for collision over a strategy that includes
possible job cuts at Europe’s biggest semiconductor maker,
according to people familiar with the matter.
Chief Executive Officer Carlo Bozotti’s turnaround plan for
the digital unit, which makes chips used in set-top boxes and
smartphone sensors, entails cutting hundreds of positions in
France and elsewhere out of a workforce of about 2,500, the
people said, asking not to be identified discussing private
deliberations. France and Italy’s governments together own 27.5
percent of Geneva-based STMicro.
The proposal is drawing criticism from the French
government, which questions Bozotti’s research and development
decisions and how he allocated hundreds of millions of euros in
state and European Union subsidies, the people said.
The French stakeholder is also disappointed by some past
technology choices and timing of product launches, and its trust
in management has been damaged after the company made overly
optimistic presentations about its business in recent months,
said one of the people with knowledge of the situation.
The simmering tension between what was once one of the
world’s largest chipmakers and its shareholder centers on CEO
Bozotti, a 62-year-old Italian who is in his 11th year leading
the company. Under Bozotti, STMicro accumulated about $1 billion
in net losses, partly because of wrong bets on chip customers
such as Nokia Oyj. Its 2014 revenue, at $7.3 billion, was 17
percent less than in 2005, the year he joined the company.
Volatile Demand
A STMicro spokesman declined to comment on its relationship
with shareholders and plans for the digital unit, and said
Bozotti wasn’t available for an interview. STMicro continues to
explore options for the business and expects an update in
October, Bozotti said on an earnings conference call on July 23.
Representatives for France’s Economy Ministry and Finance
Ministry didn’t return calls seeking comment.
The chipmaker’s supervisory board has one representative
from France and Italy each. Italy’s government remains
supportive of Bozotti and his management team and is focused on
a transfer of the STMicro shares from the finance ministry to
the Fondo Strategico Italiano, two people familiar with the
matter said.
While efforts to push its chips to carmakers and onto
wearable electronics have paid off, STMicro remains exposed to
products whose demand are more volatile, such as personal
computers and smartphones.
STMicro employed more than 43,000 people at the end of last
year. About 11,000 workers are in France and almost 10,000 in
Italy, according to unions. The digital business, which accounts
for about 15 percent of STMicro’s revenue, includes some
products inherited from a former venture with Ericsson AB. It
has factories in Crolles and Rousset in southeastern France.
STMicro union representatives have voiced concerns about
Bozotti’s decisions to quit some product developments in favor
of others. In a July 18 letter addressed to STMicro’s government
shareholders and the European Commission, Works Council
Secretary Henri Errico included a change in management on its
list of proposals for the chipmaker.
“During the past decade STMicroelectronics has fallen down
the industry’s rankings amid a finance-only focus that’s yielded
no result,” Errico wrote. “Employees denounce this unclear and
short-term strategy that’s led to business failures and
inefficient reorganizations.”
For Related News and Information:
Top Stories: TOP <GO>
BI on Semiconductor Industry: BI SEMC <GO>
--With assistance from Daniele Lepido in Milan.
To contact the reporters on this story:
Marie Mawad in Paris at +33-1-5530-6290 or
mmawad1@bloomberg.net;
Francois de Beaupuy in Paris at +33-1-5365-5051 or
fdebeaupuy@bloomberg.net;
Helene Fouquet in Paris at +33-1-5365-5038 or
hfouquet1@bloomberg.net
To contact the editors responsible for this story:
Kenneth Wong at +49-30-70010-6215 or
kwong11@bloomberg.net
Ville Heiskanen
2015-07-31 13:41:17.182 GMT
By Marie Mawad, Francois de Beaupuy and Helene Fouquet
(Bloomberg) -- STMicroelectronics NV and its French state
owner are headed for collision over a strategy that includes
possible job cuts at Europe’s biggest semiconductor maker,
according to people familiar with the matter.
Chief Executive Officer Carlo Bozotti’s turnaround plan for
the digital unit, which makes chips used in set-top boxes and
smartphone sensors, entails cutting hundreds of positions in
France and elsewhere out of a workforce of about 2,500, the
people said, asking not to be identified discussing private
deliberations. France and Italy’s governments together own 27.5
percent of Geneva-based STMicro.
The proposal is drawing criticism from the French
government, which questions Bozotti’s research and development
decisions and how he allocated hundreds of millions of euros in
state and European Union subsidies, the people said.
The French stakeholder is also disappointed by some past
technology choices and timing of product launches, and its trust
in management has been damaged after the company made overly
optimistic presentations about its business in recent months,
said one of the people with knowledge of the situation.
The simmering tension between what was once one of the
world’s largest chipmakers and its shareholder centers on CEO
Bozotti, a 62-year-old Italian who is in his 11th year leading
the company. Under Bozotti, STMicro accumulated about $1 billion
in net losses, partly because of wrong bets on chip customers
such as Nokia Oyj. Its 2014 revenue, at $7.3 billion, was 17
percent less than in 2005, the year he joined the company.
Volatile Demand
A STMicro spokesman declined to comment on its relationship
with shareholders and plans for the digital unit, and said
Bozotti wasn’t available for an interview. STMicro continues to
explore options for the business and expects an update in
October, Bozotti said on an earnings conference call on July 23.
Representatives for France’s Economy Ministry and Finance
Ministry didn’t return calls seeking comment.
The chipmaker’s supervisory board has one representative
from France and Italy each. Italy’s government remains
supportive of Bozotti and his management team and is focused on
a transfer of the STMicro shares from the finance ministry to
the Fondo Strategico Italiano, two people familiar with the
matter said.
While efforts to push its chips to carmakers and onto
wearable electronics have paid off, STMicro remains exposed to
products whose demand are more volatile, such as personal
computers and smartphones.
STMicro employed more than 43,000 people at the end of last
year. About 11,000 workers are in France and almost 10,000 in
Italy, according to unions. The digital business, which accounts
for about 15 percent of STMicro’s revenue, includes some
products inherited from a former venture with Ericsson AB. It
has factories in Crolles and Rousset in southeastern France.
STMicro union representatives have voiced concerns about
Bozotti’s decisions to quit some product developments in favor
of others. In a July 18 letter addressed to STMicro’s government
shareholders and the European Commission, Works Council
Secretary Henri Errico included a change in management on its
list of proposals for the chipmaker.
“During the past decade STMicroelectronics has fallen down
the industry’s rankings amid a finance-only focus that’s yielded
no result,” Errico wrote. “Employees denounce this unclear and
short-term strategy that’s led to business failures and
inefficient reorganizations.”
For Related News and Information:
Top Stories: TOP <GO>
BI on Semiconductor Industry: BI SEMC <GO>
--With assistance from Daniele Lepido in Milan.
To contact the reporters on this story:
Marie Mawad in Paris at +33-1-5530-6290 or
mmawad1@bloomberg.net;
Francois de Beaupuy in Paris at +33-1-5365-5051 or
fdebeaupuy@bloomberg.net;
Helene Fouquet in Paris at +33-1-5365-5038 or
hfouquet1@bloomberg.net
To contact the editors responsible for this story:
Kenneth Wong at +49-30-70010-6215 or
kwong11@bloomberg.net
Ville Heiskanen