Intel just scored a major legal victory after a U.S. court dismissed a shareholder lawsuit accusing the company of misleading investors about massive losses in its foundry business. The lawsuit claimed that Intel deliberately delayed disclosing a $7 billion loss in its foundry operations for 2023, causing stock prices to be artificially high. When the truth came out, Intel’s stock reportedly plummeted 26%, wiping out over $32 billion in market value in a single day.
However, U.S. District Judge Trina Thompson ruled in favor of Intel, stating that the investors failed to prove they were misled. The court found that Intel’s reported numbers weren’t intentionally deceptive and that statements made by then-CEO Patrick Gelsinger about the foundry business were not misleading.
What Was the Lawsuit About?
Shareholders argued that Intel should have revealed its financial struggles in the foundry business earlier. They claimed the company’s leadership gave a false impression that the foundry services were performing well, leading investors to buy or hold onto shares based on incomplete information.
The controversy reached its peak when Intel finally disclosed the losses, triggering a massive sell-off and causing the stock price to crash. Investors alleged they suffered major financial damage due to the delayed announcement.
How Intel Won the Case
Judge Thompson dismissed the claims, stating that the $7 billion loss wasn’t solely tied to the foundry services but rather part of a larger restructuring effort. The court also ruled that Intel’s positive remarks about demand in the foundry business weren’t misleading because they were referring to specific customer engagements rather than overall revenue growth.
With this ruling, Intel avoids a prolonged legal battle and further reputational damage, allowing it to shift focus back to its operations.
Intel’s Foundry Business Struggles
While Intel has managed to escape this legal challenge, the company is still facing intense competition in the semiconductor industry. Rivals like Nvidia, AMD, and TSMC continue to dominate the market, particularly in cutting-edge AI and high-performance computing.
Intel has been struggling to keep up, reporting a $1.61 billion quarterly loss and announcing major cost-cutting measures. The company has already laid off over 15,000 employees and suspended dividend payouts to save an estimated $10 billion by 2025.
What’s Next for Intel?
Despite the financial setbacks, Intel remains committed to its foundry business and aims to manufacture chips for external customers. The company is investing in new technologies and manufacturing processes to regain its competitive edge.
This legal victory clears a major hurdle, giving Intel some breathing room to focus on turning its business around. However, with ongoing financial pressures and tough industry competition, the tech giant still has a long road ahead.
