Europe's $1.2 Billion STMicroelectronics Deal Aims To Secure Future Tech
STMicroelectronics NV (NYSE:STM) has secured a financing agreement from the lending arm and financial institution of the European Union to fund R&D and manufacturing expansion in Europe.
The European Investment Bank (EIB) signed a 500 million euros financing deal with STMicroelectronics to strengthen Europe’s competitiveness and strategic autonomy, marking the first tranche of a 1 billion euros ($1.2 billion) credit line approved for the chipmaker.
Roughly 60% of the funding will go toward manufacturing capacity at its Catania, Agrate, and Crolles sites, with the remaining 40% dedicated to research efforts, Reuters reported on Thursday.
Also Read: STMicroelectronics CFO Flags Margin Squeeze, Cites Production Inefficiencies
This marks the ninth financing deal between STMicroelectronics and the EIB, bringing total support since 1994 to 4.2 billion euros.
The EIB, which has financed nine STMicroelectronics projects since 1994, said the new funding will support STMicroelectronics’ semiconductor investments in Italy and France, covering both R&D and high-volume manufacturing at key sites in Catania, Agrate, and Crolles.
EIB and STMicroelectronics Tout Strategic Importance
STMicroelectronics CEO Jean-Marc Chery said the loan will strengthen Europe’s semiconductor ecosystem and help advance the company’s differentiated technologies and manufacturing capacity.
EIB Vice-President Ambroise Fayolle added that financing the company’s advanced manufacturing and research will help Europe secure critical technologies and create high-skilled jobs.
The announcement follows a recent EIB visit to STMicroelectronics’ Catania facility, a state-of-the-art plant spanning the full silicon carbide value chain and a key beneficiary of the financing.
STMicroelectronics stock has gained just over 5% year-to-date, lagging the NYSE Composite Index’s 15% returns, primarily due to weak guidance, margin pressures, and a slow recovery in demand in its key automotive and industrial markets.
CEO Projects Normalization in 2026 Despite Short-Term Dip
On November 12, STMicroelectronics’ stock rose after CEO Jean-Marc Chery said the company expects 2026 to start at normal levels and stressed that this year’s weaker-than-expected recovery won’t lead to excess customer inventory.
At a Morgan Stanley conference, Chery said first-quarter revenue will fall 10%–11% from the upcoming fourth quarter, forecast at $3.28 billion, but still deliver roughly 20% year-over-year growth, according to Reuters.
Shares dropped more than 9% on October 23 after margin pressure and a cautious outlook overshadowed stronger-than-expected third-quarter 2025 results.
The chipmaker, which supplies Apple Inc. (NASDAQ:AAPL) and Tesla Inc. (NASDAQ:TSLA), reported $3.19 billion in revenue, slightly ahead of estimates, but its gross margin fell 460 bps to 33.2%, and its operating margin declined 610 bps to 5.6% due to weaker manufacturing efficiency and an unfavorable product mix.
Despite beating EPS expectations at 29 cents, profitability fell sharply.
Capex Cut for 2025; Margin Recovery Expected
STMicroelectronics cut 2025 capex to below $2 billion as it responds to soft demand and geopolitical uncertainty.
However, the management expressed confidence that margins will gradually recover as factory utilization improves.
STMicroelectronics competes with Texas Instruments Inc. (NASDAQ:TXN), On Semiconductor Corp. (NASDAQ:ON) in general semiconductors, and with Analog Devices, Inc. (NASDAQ:ADI), Microchip Technology Inc. (NASDAQ:MCHP)
and even Nvidia Corp. (NASDAQ:NVDA) in specific segments, as these firms fight for market share in automotive, industrial and consumer electronics through innovation, pricing and strategic partnerships.
STM Price Action: STMicroelectronics shares were down 1.41% at $25.95 during premarket trading on Thursday, according to Benzinga Pro data.
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