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ST Europe strike, how will it affect the chip industry?

Published :11/9/2020 1:54:30 AM

Click Count:2103

Foreign media evertiq and others reported that on November 5 local time, after ST's management decided not to raise wages for employees this year, the three main labor unions of French ST, CAD, CFDT and CGT, launched strikes at all French ST factories. .

The French Federation of Trade Unions CGT, the French Workers' Democratic Union CFDT, the French Staff Union-Managers Federation and the Executives Federation CFE-CGC are the main trade union organizations within ST. CAD should refer to CFE-CGC. Among them, CFE-CGC and CFDT represent more than half of ST's employees in France.

At present, ST’s main wafer fabs are in France and Italy. There are three wafer fabs in France. They are located in Rousset’s 8-inch wafer fab. It is ST’s largest 8-inch wafer fab. It just invested 1.4 billion US dollars in 2019. Upgrade the production line; the fab located in Tours is ST's main factory for developing gallium nitride process technology; the Crolles factory where the strike occurred is ST's 12-inch fab, which mainly produces FD-SoI process products.


At the Crolles factory, some employees have gone on strike. In the morning shift, there were 60 strikers, and in the day shift, there were about 150 strikers. CAD estimates 200 strikers for the night shift.

The union believes, “On October 28, 2020, ST management showed incredible contempt for ST employees and their work. They did not recognize the employees’ efforts, so they decided not to increase their salaries this year. This is an exception. "The union also said that although the company has achieved outstanding performance in 2020 and maintained a positive forecast for the next quarter, it still decided not to raise the salary.

In March of this year, with the spread of the epidemic in Europe, ST reached an agreement with CFDT and CFE-CGC in response to workers’ concerns about contracting the new crown virus, agreeing to reduce the production of the French factory by 50%.

CAD believes (without salary increase) this is a disguised use of employee salaries to pay for the epidemic prevention and control. "ST management refused to give employees a salary increase on the grounds that they increased the cost of 16.9 million euros (including 6.4 million euros in insurance premiums and factory compensation) in terms of epidemic prevention, and at the same time recovered their bonuses from their maternity leave and the epidemic. During the period, the wages of other employees who did not work or were unable to work in the factory were also recovered."

CGT pointed out that the 100 senior executives of French ST can receive an average annual bonus of about 200,000 euros, including stocks worth 50,000 euros.

Therefore, CAD believes that “ST’s management also directly and openly provides funds for epidemic prevention measures to some employees, which is absolutely not good.”

Although ST outsourced some of its chips to TSMC and Samsung's foundry before announcing production cuts in March, it is also a question of whether ST can get enough production capacity as the foundry capacity continues to be tight this year. In addition, on October 28, due to the fierce second wave of the new crown epidemic, France once again implemented national blockade measures, which is bound to have a certain impact on factory production. If the ST strike cannot be resolved quickly, some products that are already out of stock and price increase will be even more in short supply.

According to ST’s third-quarter financial report, ST’s third-quarter net revenue was US$2.67 billion, an increase of 27.8% month-on-month and a year-on-year increase of 4.4%; gross profit margin was 36.0%; operating profit margin was 12.3%, a month-on-month increase of 208.8%; net profit was 2.42 Billion US dollars, an increase of 169.1% month-on-month. At the same time, the fourth quarter net income is estimated to be 2.99 billion US dollars, and the gross profit margin is 38.5%. ST CEO Jean-Marc Chery predicts that the median net income for 2020 will be approximately US$9.97 billion, an increase of 4.3% year-on-year, and the operating profit margin will reach double digits.