STMicroelectronics specifies its restructuring efforts in Europe

June 10, 2005 – This week, STMicroelectronics, during a meeting of its European Work Council, specified the restructuring efforts, already announced on May 16, to recover profitability after the disappointing results of 1Q05. As previously disclosed, the moves reposition the Company’s cost structure in the competitive environment of the industry, characterized by the slowing growth rate of demand and the continued weakness of the US dollar.

Within this challenging environment, ST has previously announced a series of wide-ranging initiatives aimed at improving the Company’s competitiveness and financial performance through accelerated innovation, a reduction of costs, and the broadening of its customer base.

In addition to the prior measures, the Company presented principles of the initiatives that will bring the cumulative reduction of its workforce in Europe, out of a total of 3000 outside Asia, to 2300 jobs by mid-2006, including the nonrenewal of some temporary positions.

The company plans to reorganize its European activities by: 1) converting 6-in production tools to 8-in, in pursuit of the program already undertaken; 2) optimizing on a global scale its EWS activities (wafer test); 3) harmonizing its support functions, reducing its costs and rationalizing its activities (outside of manufacturing); and
4) disengaging from certain activities.

STMicroelectronics said that this project must now be submitted to the workers representatives in each of the countries involved, that it is committed to minimizing the social impact of this reorganization, and that it intends to remain a key player in European research.


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