STMicroelectronics, one of Europe's leading chipmakers, announced Thursday that it will acquire the sensor business of NXP Semiconductors for up to $950 million in cash. The move is aimed at strengthening ST's position in the MEMS (micro-electromechanical systems) sensor market, particularly in automotive safety and industrial monitoring applications.

Under the terms of the agreement, STMicro will make an upfront payment of $900 million, with an additional $50 million contingent upon the achievement of specific technical milestones. The NXP sensor unit generated approximately $300 million in revenue in 2023 and includes high-value products such as automotive safety and industrial-grade pressure sensors. The transaction is expected to close in the first half of 2026, pending regulatory approval.

The acquisition comes amid challenging conditions in the global semiconductor market, particularly in the automotive, industrial, and consumer sectors. Chipmakers are grappling with sluggish demand and elevated inventory levels, putting pressure on earnings across the industry.

STMicro also released its second-quarter earnings report Thursday, posting a net loss of $190 million—the company's first quarterly loss in over a decade. The loss was primarily driven by $190 million in restructuring and impairment charges tied to a broader cost-cutting initiative launched in October 2024. Adjusted operating loss came in at $133 million, significantly below analysts' average forecast of a $54 million operating profit.

Quarterly revenue fell 14% year-over-year to $2.77 billion, though it slightly exceeded analyst expectations of $2.74 billion. Automotive chip sales came in lower than anticipated, while revenue from personal electronics and industrial segments showed modest improvement.

STMicro has already implemented a 6% workforce reduction and continues to face scrutiny from the Italian and French governments, which together own over a quarter of the company. Both governments have voiced concerns about management effectiveness, especially as ST's share price has dropped 27% over the past year.

Trade tensions and tariffs are also weighing heavily on the automotive sector, ST's largest revenue contributor. Uncertainty caused by shifting tariffs has disrupted global supply chains and prompted some automakers to stockpile chips, potentially suppressing future demand. Analysts warn that this could undermine any near-term recovery in automotive chip sales.

Despite the tough macroeconomic landscape, the NXP acquisition signals STMicro's intent to invest strategically in high-growth segments. By expanding its MEMS portfolio and enhancing its sensor capabilities, the company aims to bolster long-term competitiveness and better weather short-term headwinds.