ABN Amro, the bank with its headquarters in Holland, has suggested to STMicroelectronics it could close down its facilities in Europe and in Malta.

The bank’s analysis of the STM shareprice confirmed its “hold” rating at a price of EUR12.7.

Although the world’s markets have switched to positive in the past weeks, the STM shares are still on a decreasing slope. The shares reached a peak of EUR15.6 on 22 May but today it is around EUR11.5, a 30 per cent decrease.

The biggest slide took place at the end of July when the Italian-French group presented its quarterly results. This is a sure sign the market did not like the group’s results especially since the company had to decrease some of its predictions. In fact, in the three days from 24 to 26 July, the company’s shareprice slid by 10 per cent.

This however did not stop Unicredit from advising “buy” with a target price of EUR14.5 as the association of semiconductor manufacturers has said in recent weeks that global sales of semiconductors increased by 4.9 per cent in August with sales amounting to $21,000 millions. Even so, Unicredit said STM’s fourth quarter might be further weakened by the dollar’s weakness compared to the euro.

Abn Amro was less positive in its advice. It confirmed its “hold” rating and said STM may choose to consider a number of strategic options. The bank’s analyst said the group’s economic model is “a little old” and it is heavily dependent on a reduced number of big clients such as Nokia, HP and Seagate and this has led to a constant erosion of its market share in key sectors.

With the euro at $1.42, the bank thinks that STM, which is grossly exposed to the dollar’s weakness, could announce new closures of sites in Europe and in Malta.

The bank also suggested to the group that it could utilise its treasury of EUR1,500 million (end 2007) to reinforce its positioning in the world wireless telecom sector and to re-equilibrate its cost structure outside Europe by acquiring an American competitor.