It’s Only Common Sense: Customers Need Confidence More Than Low Prices
Dan’s Biz Bookshelf: Revisiting 'The Popcorn Report'
While companies like NVIDIA dominate the headlines with announcements of record chip sales associated with AI, European chip makers that are more dependent on industrial and automotive electronics are under pressure as demands for their chips slow. NXP, headquartered in the Netherlands, recently announced disappointing financials, down 5% from the previous year, primarily due to softening demand in those markets. With a trade war looming with the U.S., NXP has announced that it will lay off 1,800 workers locally, less than 5% of its global workforce. Unlike NVIDIA, NXP chips go into a variety of internet-connected devices, some of which are more sensitive to market fluctuations than other products in which chips are essential.
Additionally, Franco-Italian chip maker STMicroelectronics NV has announced layoffs that will amount to approximately 6% of its workforce. Unlike NXP, STMicroelectronics will approach this shift through early retirements and natural attrition, begging the question of how quickly it will be able to achieve this goal.
This is certainly consistent with the many news announcements made over the last several months from individual companies, as well as market watchdogs, around the European economy as it relates to electronics. In June of last year, IPC published a news release “Sharp Decline in European Electronics Manufacturing Jeopardizes Strategic EU Priorities,” putting out a call to action to European manufacturers and EU lawmakers for “a more ambitious and focused strategy to revitalize European manufacturing.” As that work continues—and will continue—it may be too late for the nearly 5,000 workers that will be laid off between NXP and STMicroelectronics.
As we all wait anxiously to understand the full spectrum of implications of the global tariff and trade war the U.S. plans to put on all its commerce “partners” of the United States, what we know for sure it that 2025 is going to be an interesting year in business, and that this is not the last we will see announcements of workforce reduction and resource reallocation.
