European chipmaker STMicroelectronics, a key supplier to Tesla and Apple, has announced plans to cut up to 2,800 jobs globally by 2027 as part of a sweeping cost-reduction strategy amid weakening demand across automotive and industrial markets.

The job cuts, detailed in company documents released April 10, are part of a broader operational restructuring first initiated last October. Most layoffs will occur in 2026 and 2027 and will be managed through voluntary departures, particularly targeting employees nearing retirement. As of the end of 2024, STMicro employed nearly 50,000 people.

The restructuring comes in response to a downturn in legacy chip demand—older-generation semiconductors used in vehicles, industrial equipment, and other electronics. While demand for AI-related chips remains strong, STMicro's reliance on traditional markets has left it exposed. The company forecast a 28% year-over-year revenue decline for Q1 2025, falling short of analyst expectations and prompting investor concern.

Despite the layoffs, STMicro is pressing ahead with major investments to modernize and optimize its global manufacturing footprint. Over the next three years, the company plans to reshape its manufacturing ecosystem by concentrating digital technologies in France, analog and power technologies in Italy, and mature process technologies in Singapore.

In Italy, the Agrate 300mm fab will be scaled up to become ST's flagship high-volume manufacturing site for smart power and mixed-signal technologies, with planned capacity increases from 4,000 to potentially 14,000 wafers per week (wpw) by 2027. Meanwhile, the adjacent 200mm fab will shift focus to MEMS. In Catania, the company is building a new Silicon Carbide Campus, set to begin 200mm wafer production in Q4 2025, reinforcing its leadership in wide-bandgap power semiconductors including GaN-on-silicon.

In France, the Crolles 300mm fab will be cemented as the core of ST's digital ecosystem, with capacity expanding to as much as 20,000 wpw. Its older 200mm line will be converted for electrical wafer sorting and advanced packaging, including optical sensing and silicon photonics—functions not currently found elsewhere in Europe. Rousset and Tours will remain focused on 200mm technologies, with Tours also becoming a hub for GaN epitaxy and panel-level packaging—critical for emerging chiplet architectures.

In Singapore, the Ang Mo Kio site will retain its role in high-volume 200mm production and become the central hub for global 150mm legacy operations. Malta's Kirkop facility, meanwhile, will be upgraded with advanced automation to support next-generation packaging and testing.

However, these ambitious expansion plans are unfolding amid political tensions. On April 9, Italy's Economy Minister Giancarlo Giorgetti publicly withdrew support for STMicro CEO Jean-Marc Chery, accusing company leadership of selling shares ahead of earnings warnings and rejecting Italy's supervisory board nominee, Marcello Sala. Giorgetti called the move “unacceptable” and vowed Italy would adopt a “critical opposition” stance toward the company.

STMicro denied the insider trading allegations, stating the share sales were made during a blackout period through an automated stock plan administrator in compliance with Swiss regulations. France's Industry Minister Marc Ferracci offered full support for Chery, underscoring tensions between the company's dual French-Italian ownership.

At the April 10 board meeting, STMicro reaffirmed its investment commitments in Italy and expressed willingness to engage in “constructive talks” with trade unions to manage the workforce transition. Italian union representatives and officials were present, though Italy's sole board representative, Paolo Visca, did not attend.

The company also faces a U.S. class action lawsuit alleging it misled investors in early 2024 while insiders allegedly offloaded stock. STMicro said it has a “strong defense” against the claims.

Founded in 1987 through the merger of Italy's SGS Microelettronica and France's Thomson Semiconducteurs, STMicroelectronics remains one of Europe's leading chipmakers, supplying critical components to global tech giants including Tesla, Apple, and Samsung.

As STMicro restructures and invests in next-generation manufacturing, it faces mounting pressure—from markets, shareholders, and governments—to balance innovation with accountability in an increasingly complex geopolitical and technological environment.