Intel Triumphs in Shareholder Lawsuit Over Foundry Losses

(Reuters) – In a significant legal victory, Intel has successfully dismissed a shareholder lawsuit that accused the chip giant of fraudulently concealing critical issues within its foundry business. This lawsuit emerged after the company faced a staggering $32 billion drop in market value in a single day, attributed to job cuts and a suspension of dividends.

Judge’s Ruling on Foundry Business Claims

On Tuesday, U.S. District Judge Trina Thompson, based in San Francisco, announced her decision to reject the claims made by shareholders. They alleged that Intel had delayed revealing a substantial $7 billion operating loss for fiscal 2023, which was linked to its foundry services for external customers. However, Judge Thompson clarified that the shareholders had misattributed this loss to the Intel Foundry Services business unit. She stated that they were not misled into believing that the reported results encompassed the entire Internal Foundry Model.

Statements from Former CEO Patrick Gelsinger

Furthermore, the judge noted that statements made last March by former Chief Executive Patrick Gelsinger, who claimed that Intel was experiencing “significant traction” and “growing demand for our foundry offering,” were not misleading. These comments were specific to certain customers rather than reflecting the overall revenue, which has been on a decline.

Shareholder Response and Future Actions

As of Wednesday, lawyers representing the shareholders had not responded to requests for comment regarding the ruling. Intel, on the other hand, opted not to provide any comments on the matter. Judge Thompson did mention that the plaintiffs have the option to file an amended complaint, indicating that the legal battle may not be entirely over.

Background of the Lawsuit

The lawsuit accused Intel of artificially inflating its stock price from January 25 to August 1, 2024. During this period, Intel reported a quarterly loss of $1.61 billion and announced plans to lay off over 15,000 employees. Additionally, the company decided to suspend its dividend in an effort to save $10 billion by 2025. This series of events has raised concerns about Intel’s ability to compete effectively in the chip market.

Challenges Facing Intel

Based in Santa Clara, California, Intel has been grappling with intense competition from rival chipmakers. The company has struggled to maintain its market position while also attempting to capitalize on the growth of artificial intelligence technologies. The ongoing challenges in the semiconductor industry have prompted Intel to reevaluate its strategies and focus on improving its foundry services.

Conclusion

Intel’s recent legal victory marks a pivotal moment for the company as it navigates through turbulent waters in the semiconductor market. While the dismissal of the shareholder lawsuit provides some relief, the company must continue to address its operational challenges and work towards regaining investor confidence. As the semiconductor landscape evolves, Intel’s ability to adapt and innovate will be crucial for its future success. For more details, you can read the original article here.