STMicroelectronics (STM) Denies Split-Up Chatter, But Investors Aren't So Convinced
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STMicroelectronics (NYSE: STM) shares are popping today following earlier chatter that the chip maker might be evaluating options for a possible break up of the company.
According to Bloomberg, STMicro might split its analog business from the digital segment. The digital unit hasn't been performing as well as it could and pressuring overall stock performance as a result.
Samsung, which has manufactured some advanced chips on STMicro's behalf in the past, might be a buyer of the digital assets.
The Company did issue a release Friday, denying "the existence of initiatives which can compromise the unity of the Company." In layman's terms: "we're not planning to split up anything, people."
But, given heightened competition in the chip market from lower-cost competition out of Asia, the Switzerland-based STMicro may struggle to regain solid footing in the mobile chip segment.
Complicating a split is the structure of STMicro; Italy and France own about 27.5 percent of the company, so any moves would need to be done almost in assurance that neither government would see job cuts.
Otherwise, STMicro's analog unit, which makes chips and sensors for items like auto components and video game consoles, is still going strong.
Shares of STMicro are over 7.5 percent higher Friday.
According to Bloomberg, STMicro might split its analog business from the digital segment. The digital unit hasn't been performing as well as it could and pressuring overall stock performance as a result.
Samsung, which has manufactured some advanced chips on STMicro's behalf in the past, might be a buyer of the digital assets.
The Company did issue a release Friday, denying "the existence of initiatives which can compromise the unity of the Company." In layman's terms: "we're not planning to split up anything, people."
But, given heightened competition in the chip market from lower-cost competition out of Asia, the Switzerland-based STMicro may struggle to regain solid footing in the mobile chip segment.
Complicating a split is the structure of STMicro; Italy and France own about 27.5 percent of the company, so any moves would need to be done almost in assurance that neither government would see job cuts.
Otherwise, STMicro's analog unit, which makes chips and sensors for items like auto components and video game consoles, is still going strong.
Shares of STMicro are over 7.5 percent higher Friday.
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