Intel has successfully defended itself against a shareholder lawsuit that accused the company of concealing issues within its foundry business, which led to significant job cuts, a dividend suspension, and a dramatic $32 billion drop in market value in a single day.
On March 5, U.S. District Judge Trina Thompson in San Francisco ruled that the claims against Intel were without merit, dismissing the allegations that the company had fraudulently hidden a $7 billion operating loss for its foundry business in fiscal 2023. The loss was only revealed in April 2024 after Intel revised its financial reporting methods.
The lawsuit claimed that Intel took too long to disclose the financial loss, and that it misled shareholders by not revealing the full scope of problems in its foundry business. However, Judge Thompson disagreed, stating that shareholders had incorrectly linked the loss to the Intel Foundry Services unit and that the statements made by former CEO Patrick Gelsinger about the company’s “significant traction” and “growing demand” for its foundry services were not misleading, as they referred to specific customers rather than overall revenue.
The lawsuit alleged that Intel had artificially inflated its stock price between January 25 and August 1, 2024, a period that included the announcement of a $1.61 billion quarterly loss and plans for major layoffs and a dividend suspension. Following these announcements, Intel’s share price plummeted 26%, wiping out $32 billion in market value.
Intel has faced increasing competition from rivals such as Nvidia, AMD, Samsung Electronics, and Taiwan’s TSMC, and the company has struggled to gain a foothold in the booming artificial intelligence sector. Intel’s CEO Patrick Gelsinger was replaced in December 2024 amid these challenges.
The case is titled In re Intel Corp Securities Litigation, filed in the U.S. District Court for the Northern District of California (Case No. 24-02683). The plaintiffs may amend their complaint, as noted by Judge Thompson.
