By Kashifa Wisal
Intel Corp. won a shareholder lawsuit that charged the chipmaker with fraudulently concealing issues in its foundry business, causing a record $32 billion decline in market value in one day.
On Tuesday, San Francisco-based U.S. District Judge Trina Thompson threw out the lawsuit, brought by shareholders alleging that Intel had hidden a $7 billion operating loss tied to its foundry business in fiscal year 2023. The plaintiffs claimed the company’s delayed disclosure of this loss resulted in artificially inflated stock prices and triggered a sudden market drop. Intel’s shares declined 26% the following day after it reported a quarterly loss of $1.61 billion, a layoff of more than 15,000 workers, and a halting of its dividend, steps to save $10 billion in 2025.
The crux of the suit was based on claims that Intel’s ex-CEO Pat Gelsinger and ex-CFO David Zinsner had duped investors by not disclosing the $7 billion loss in its Intel Foundry Services (IFS) division right away. The shareholders alleged that the company artificially inflated its share price between January 2024 and August 2024 by concealing the foundry business unit’s woes. The suit contended that when the firm finally revealed the losses, the disclosure led to a sudden decline in its market value, wiping out more than $32 billion in one day.
Judge Thompson decided that the plaintiffs had improperly attributed the $7 billion loss exclusively to Intel’s foundry business, adding that the subject financial loss did not directly result from the Intel Foundry Services business. She also dismissed the assertion that Intel misled investors through statements by Gelsinger in March 2024, when he boasted of “significant traction” and “growing demand” for the company’s foundry services. The judge noted that Gelsinger’s comments were limited to specific clients and didn’t guarantee overall revenue expansion, which was actually in decline.
Intel’s move to an internal foundry model in early 2024, where its product groups and external customers would buy manufacturing and packaging services from Intel Foundry, was another central part of the case. Intel had previously only reported on the performance of its Intel Foundry Services unit, which only served external customers.
After the ruling, shareholders can still modify their complaint. Intel would not comment on the ruling, and the plaintiffs could not be reached immediately for further comment.
Keywords: intel, lawsuit, foundry services