Intel beats shareholder lawsuit over US$32 billion stock plunge

Intel logo (AFP PHOTO / Robyn Beck)

A federal judge dismissed a lawsuit accusing Intel of defrauding shareholders by concealing problems in a business where it manufactured chips for outside customers, leading to a US$32 billion one-day plunge in its market value.

While saying she “understands plaintiffs’ frustrations,” U.S. District Judge Trina Thompson in San Francisco ruled on Wednesday that Intel did not wait too long to reveal a $7 billion fiscal 2023 operating loss in its foundry business.

Intel’s stock price sank 26 per cent Aug. 2 2024, one day after the chipmaker announced more than 15,000 layoffs and suspended its dividend, hoping to save $10 billion in 2025.

The Santa Clara, Calif.-based company created the foundry business in 2021 to serve customers including Amazon.com and Qualcomm, while still making chips and wafers for internal use.

In a 21-page decision, Thompson said Intel made clear that foundry results would be “obscured” until 2024, meaning its earlier financial reporting was not false and misleading.

Thompson also cited an “overarching policy consideration” that because Intel’s public statements suggested a “trial-and-error” approach to the foundry business, the company could have faced risks from reporting preliminary, unaudited data.

The judge dismissed an earlier version of the lawsuit in March. Wednesday’s dismissal was with prejudice, meaning the shareholders cannot sue again.

Intel had been accused of inflating its stock price from Jan. 25 to Aug. 1, 2024.

Lawyers for the shareholders did not immediately respond to requests for comment on Thursday. Intel and its lawyers did not immediately respond to similar requests.

Intel has struggled to compete with rival chipmakers such as Nvidia, Advanced Micro Devices, Samsung Electronics and Taiwan’s TSMC and benefit from growth in artificial intelligence.

The company lost $18.8 billion in 2024, its first annual loss since 1986.

(Reporting by Jonathan Stempel in New YorkEditing by Nick Zieminski)