STMicro to temporarily cut 50 percent of French production

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STMicro is temporarily halting up to 50 percent of its French semiconductor production.

By now, it’s no mystery that the COVID-19 pandemic is going to have a profound impact on the semiconductor industry. This was seen previously as the virus swept through China, shutting down factories and company headquarters. Now, as the novel coronavirus continues to spread globally, more component manufacturers are feeling its impact.

One of these businesses is STMicroelectronics. After previously stating their Italian sites would remain open, the semiconductor maker is now temporarily reducing its production in France by as much as 50 percent. The move aims to help slow the spread of COVID-19 and keep employees safe.

Temporary Halt

STMicro’s decision came late Wednesday night when the company signed an accord with one of France’s main unions—one that represents over half of the country’s workforce. The temporary closure will be in effect until at least April 2. However, depending on the progression of the virus’ spread, that date could be pushed back.

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It will affect all of STMicroelectronics’ production facilities in France.

Jean-Pierre Kiledjian, leader of the CFE CGC union for STMicro says, “The goal is to reduce activity in order to reduce the number of people on production sites as much as possible.”

The move is a rapid change for the semiconductor company. Until now, it had been running its facilities at full capacity to meet an increased number of chip orders. STMicro supplies components for everything from next-gen smartphones to low-emission smart cars.

Although production will now officially be cut in half, STMicro’s output has been decreasing over the past few days. Workers following the government’s recommendation to practice social distancing have been absent from the company’s facilities in increasing numbers.

Importantly, STMicro confirmed that employees on production supply chains will work on a rotating basis and stay home whenever possible. They will also retain the entirety of their normal salary regardless of how many hours they are able to work.

Impact on the Larger Semiconductor Industry

STMicro’s temporary dip in production is a reflection of the wider semiconductor industry. Companies located in mainland China and Taiwan are the hardest hit after government-mandated factory shutdowns halted their output for weeks.

Meanwhile, U.S.-based semiconductor companies continue to slash their quarterly outlooks in the face of the COVID-19 pandemic. From logistical delays to component shortages resulting from factory closures, the impact of the virus will be felt for some time.

Fortunately, a recent IPC survey found that the majority of electronics manufacturers believe that normal operations will resume by July. That’s one potential bright spot for an industry that’s currently feeling the painful secondhand effects of the COVID-19 outbreak.

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