SAN FRANCISCO (Reuters) — Intel Corporation has successfully defended against a shareholder lawsuit that accused the company of concealing issues within its foundry business operations. The plaintiffs had alleged that this lack of transparency led to a substantial decline in market value, triggering job cuts and a suspension of dividends. In a ruling made public on Tuesday, U.S. District Judge Trina Thompson, presiding in San Francisco, dismissed the initial claims.
The core of the lawsuit centered around an alleged $7 billion operating loss for fiscal year 2023, associated with Intel’s foundry operations, which manufacture chips for external customers. It was claimed that Intel delayed the disclosure of this loss until April of the following year, when they restructured how they reported financial results. Judge Thompson, however, disagreed with the shareholders’ interpretation of the financial statements, noting that the $7 billion was not directly attributable to the Internal Foundry Services unit solely, and therefore, investors were not misled by the financial reports. The court determined that the company had not engaged in deceptive practices.
The judge further addressed statements made by former Chief Executive Patrick Gelsinger. The lawsuit had challenged statements made by Gelsinger in March that Intel was experiencing “significant traction” and “growing demand for our foundry offering”. Judge Thompson clarified these remarks were not misleading because they pertained to specific customer interactions, not the overall revenue performance of the foundry business, which was experiencing decline. The court’s decision suggests that the plaintiffs failed to demonstrate that Intel provided false or misleading information to investors. Lawyers representing the shareholders did not immediately offer comment when contacted on Wednesday. Intel also declined to comment on the matter.
Following the judgment, Judge Thompson indicated that the plaintiffs do have the option to file an amended complaint. The lawsuit had also alleged that Intel artificially inflated its stock price between January 25th and August 1st, 2024. During this timeframe, Intel reported a $1.61 billion quarterly loss. Subsequently, the company announced that it would enact layoffs, affecting over 15,000 employees, and temporarily suspend its dividend program. These measures were intended to generate $10 billion in savings, a reduction in expenses that was made public in 2025. The market reacted swiftly to the news, with Intel’s share price plummeting by 26% the following day. This resulted in a loss of approximately $32 billion in market capitalization.
Headquartered in Santa Clara, California, Intel has been facing increasing competition from rival chipmakers. The company is working to capitalize on the growth in artificial intelligence. Key industry competitors include Nvidia, Advanced Micro Devices, Samsung Electronics, and Taiwan’s TSMC. Intel’s former CEO, Patrick Gelsinger, was replaced in December of the past year as well.
The case is formally known as In re Intel Corp Securities Litigation, and it is being handled in the U.S. District Court for the Northern District of California.
