Intel Wins Legal Battle Over Investor Claims

A U.S. federal judge recently announced the dismissal of a lawsuit against Intel Corp. (NASDAQ: INTC) that accused the company of misleading its shareholders regarding its foundry business. This came after a significant $32 billion decrease in market value following disappointing financial results.

Background: Investors claimed that Intel had hidden a substantial $7 billion operating loss related to its chip manufacturing unit, known as Intel Foundry Services, for the fiscal year 2023. This financial metric was only disclosed in April 2024 after Intel altered its financial reporting structure, according to reports.

The judge, Trina Thompson, determined that the shareholders had mistakenly connected the reported losses solely to the foundry aspect, concluding that Intel did not provide misleading information to investors.

The court also found statements made by former CEO Patrick Gelsinger in March 2024, which indicated that Intel was seeing “significant traction” and an increase in demand for its foundry offerings, were not deceptive. The statements were seen as referring to specific clients rather than overall revenue figures.

While the lawsuit has been dismissed, investors still have the option to file an amended complaint, potentially leaving the door open for further legal measures.

Importance of the Ruling: Intel is facing fierce competition from leading chip manufacturers such as Nvidia Corporation (NASDAQ: NVDA) and Taiwan Semiconductor Manufacturing Co. (NYSE: TSM), especially during the surge in artificial intelligence applications.

Recently, it was reported that Broadcom Inc. (NASDAQ: AVGO) and TSMC are considering deals that might lead to a restructuring or breakup of Intel.

Intel reported a $1.15 billion drop in its revenue for the fourth quarter compared to the previous year, as announced in January, and the company’s current market capitalization stands at approximately $90.10 billion.

To restore profitability by 2026, Intel is banking on its advanced 18A process node technology, which will be incorporated in future products like Panther Lake and Clearwater Forest.

Additionally, there are reports that Intel’s planned chip fabrication facility in Ohio might not be operational until 2030 or 2031 due to its ongoing financial difficulties, leading to a second postponement of its $28 billion semiconductor project, originally scheduled for 2025.

Current Stock Performance: According to recent data, Intel’s stock concluded trading at $20.81, showing a decrease of 2.44%, with an additional drop of 0.62% in after-hours trading. Despite these challenges, the stock has experienced a 2.92% increase this year.

Intel, lawsuit, market, investors, foundry