As the demand for automotive and industrial semiconductors declines, European chipmakers NXP Semiconductors and STMicroelectronics are preparing for workforce reductions, according to reports from ijiwei and Bloomberg.

NXP to Cut Up to 1,800 Jobs Globally

Dutch semiconductor company NXP has announced plans to reduce its global workforce by up to 1,800 positions, citing market pressures and economic uncertainty. The company clarified that while import tariffs and trade discussions between the EU and the U.S. are ongoing, the layoffs are primarily driven by broader market conditions rather than concerns over a potential trade war.

According to an NXP spokesperson, the company anticipates a slight workforce reduction, accounting for no more than 5% of its 34,000 global employees. While forced layoffs have not been ruled out, NXP aims to manage the cuts through natural attrition.

"We don't know exactly what will happen, so we can't predict. Producing a chip takes months, making it difficult to adjust production daily," the spokesperson stated. Despite the cuts, NXP remains a key supplier of automotive and industrial chips worldwide, with major operations in Eindhoven, Nijmegen, and Delft.

Declining Revenue and Market Challenges

NXP's Q4 2024 financial report revealed a 9% year-over-year revenue decline, with revenue falling to $3.11 billion. For the full year, 2024 revenue dropped 5% to $12.61 billion, reflecting weaker demand across key segments, particularly in automotive semiconductors.

NXP has expressed concerns that import tariffs could drive up costs, potentially suppressing demand further. While the company has not disclosed which locations will be most affected, job reductions may not be proportional to employee distribution across regions.

STMicroelectronics Also Planning Workforce Cuts

Meanwhile, STMicroelectronics (ST) is also considering job cuts, planning to reduce its workforce by up to 6% through early retirements and natural attrition, according to Bloomberg. The Franco-Italian chipmaker is responding to high inventory levels and weaker-than-expected demand across the industrial and automotive sectors.

In addition to layoffs, STMicroelectronics has temporarily shut down multiple wafer fabs as part of its cost-cutting efforts. The company expects Q1 2025 revenue to fall short of expectations, exacerbating its financial strain. Reports indicate as many as 3,000 jobs could be affected.

Europe's Semiconductor Industry Faces Uncertain Future

The layoffs at NXP and STMicroelectronics reflect broader instability in the semiconductor sector, as demand softens and manufacturers adjust to shifting economic conditions. As both companies navigate these challenges, further industry-wide workforce reductions could follow.