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Intel’s executives, including Chief Executive Officer Patrick Gelsinger and Chief Financial Officer David Zinsner, have been accused of making misleading statements about the company’s business and manufacturing capabilities in the lawsuit read more
 "Intel sued by shareholders as layoffs, dividend cuts sent stock plunging by 26% in a single day")
The legal action comes shortly after Intel announced a major restructuring plan aimed at saving $10 billion (around Rs. 83,976 crore) by 2025. As part of this plan, Intel said it would lay off more than 15 per cent of its workforce, which amounts to over 15,000 jobs, and suspend its dividend starting in the fourth quarter of this year. Image credit: Reuters
Intel is facing a lawsuit from shareholders who accuse the Silicon Valley chipmaker of fraudulently concealing significant issues that led to a steep decline in its market value.
The lawsuit, filed in a federal court in San Francisco, alleges that Intel’s executives, including Chief Executive Officer Patrick Gelsinger and Chief Financial Officer David Zinsner, made misleading statements about the company’s business and manufacturing capabilities.
These statements, according to the shareholders, artificially inflated Intel’s stock price from January 25 until August 1, when the truth was revealed.
On August 1, Intel disclosed that its foundry business, which manufactures chips on contract for other companies, was struggling significantly. The shareholders claim they were caught off guard by this revelation, which highlighted that the foundry business was costing billions of dollars more than expected while generating declining revenue.
The news sent shockwaves through the market, causing Intel’s share price to plummet by 26 per cent to $21.48 on August 2. This dramatic drop wiped out more than $32 billion (approximately Rs. 2,68,732 crore) in Intel’s market value in a single day.
The legal action comes shortly after Intel announced a major restructuring plan aimed at saving $10 billion (around Rs. 83,976 crore) by 2025. As part of this plan, Intel said it would lay off more than 15 per cent of its workforce, which amounts to over 15,000 jobs, and suspend its dividend starting in the fourth quarter of this year.
These measures, intended to stabilize the company amid its ongoing challenges, have not been well received by the market, leading to further declines in Intel’s stock price.
Since the August 2 announcement, Intel’s share price has continued to fall, closing at $18.99 (approximately Rs. 1,594) on Wednesday, a 34.6 per cent drop from its price before the disclosure.
The shareholders’ lawsuit, titled *Construction Laborers Pension Trust of Greater St. Louis v. Intel Corp.*, claims that Intel’s failure to disclose the true state of its foundry business and overall financial health misled investors and caused significant financial losses.
The lawsuit is the latest in a series of challenges for Intel as it competes with rivals such as Advanced Micro Devices (AMD), NVIDIA, Samsung Electronics, and Taiwan’s TSMC. These competitors have been gaining ground in the semiconductor industry, putting additional pressure on Intel to improve its operations and regain market share.
Intel has not yet commented on the lawsuit. As the case progresses, it will likely draw significant attention from the financial and technology sectors, given the substantial impact on Intel’s market value and the broader implications for the semiconductor industry. The outcome of this legal battle could have major consequences for Intel’s future strategy and its ability to navigate the highly competitive landscape of chip manufacturing.
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English (US) ·