Archive Photo: Intel won dismiss shareholder lawsuit, accusing it of covering up problems in its foundry business. |Photo source: Reuters
Intel won a lawsuit to fire shareholders, accusing chipmakers of covering up fraud in its foundry business, resulting in layoffs and dividend suspensions eliminating more than $32 billion in market value in one day.
In a decision published Tuesday, San Francisco’s U.S. District Court Judge Trina Thompson declined to say it took Intel a long time to reveal a $7 billion loss in fiscal 2023 operating, related to its business of making chips for external customers.
It wasn’t until last April that Intel disclosed the losses when it changed the changes in its reported financial results.
But the judge said shareholders mistakenly attributed the $7 billion loss to the Intel Foundry Services business unit and did not mislead the results reported by the department “including the results of the entire internal casting model.”
Thompson also said that in March last year, former CEO Patrick Gelsinger said Intel enjoying “huge appeal” and “growing demand for our casting products” was not misleading because they focused on specific customers rather than overall revenue, which is falling.
The shareholder’s attorney did not immediately respond to a request for comment Wednesday. Intel declined to comment. Thompson said the plaintiff may file a complaint of amendment.
The lawsuit accused Intel of inflated its stock price from January 25 to August 1, 2024, when Intel posted a quarterly loss of $1.61 billion and said it would cost more than 15,000 people and suspend its dividend to help save $10 billion in 2025.
Intel’s share price fell 26% the next day, resulting in a loss of $32 billion in market value.
The Santa Clara, California-based company has struggled to stand up to competition from rival chip makers and benefit from the growth of artificial intelligence.
Its competitors include NVIDIA, Advanced Micro Devices, Samsung Electronics and Taiwan TSMC. Intel expelled Gael Singh in December.
The case is in the U.S. District Court, RE Intel Corp Securities lawsuit in the North District of California, No. 24-02683.
publishing – March 6, 2025 09:24 IS
