Italy Seeks to Remove STMicro CEO Over Poor Performance

(Bloomberg) — Italy’s government wants to replace Jean-Marc Chéry, the man at the helm of Franco-Italian chipmaking joint-venture STMicroelectronics NV, for poor performance.

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Rome considers the chief executive officer’s performance insufficient amid compounding headwinds for the industry, people familiar with the matter told Bloomberg, declining to be named because they weren’t authorized to speak publicly. STMicro’s shares fell as much as 3% at 1:55 p.m. Paris time.

The pressure comes at a critical juncture for STMicro, whose shares have badly underperformed its chip peers in recent years. The stock has only returned a total of about 5% over the past five years through Monday’s close, compared with about 22% for the Euronext Paris CAC Technology Index. In the US, the Philadelphia Stock Exchange Semiconductor Index returned about 200% across the same period.

STMicro, whose chips go into cars and other products, has been struggling to navigate a slump in demand for automobile and industrial semiconductors. The company said in January that 2024 was one of the worst years in decades for the industry and gave a forecast short of analyst estimates. Bloomberg reported it was looking to cut as many as 3,000 jobs amid a persistent slump in demand.

Italian officials have acknowledged they may lack the instruments to usher in a replacement, the people said. The decision on the matter is set to become a topic of discussion between Rome and Paris, whose governments hold a combined 27.8% stake in the company, according to data compiled by Bloomberg. Chéry was reelected for a three-year term in May last year.

The Italian Treasury and STMicroelectronics declined to comment. A representative for the French industry ministry couldn’t immediately be reached for comment. French newspaper Les Echos first reported the news.

Both countries consider the company, a merger of Italy’s and France’s state-owned chipmakers in 1987, a strategic enterprise. Among its customers are Apple Inc. and Tesla Inc.

(Adds details on Chéry’s reelection. A previous version of this story corrected the size of France and Italy’s stake in the company.)