Intel recently secured a legal victory as a U.S. judge dismissed a shareholder lawsuit accusing the company of hiding losses in its foundry business. The lawsuit alleged Intel misled investors about a $7 billion operating loss in 2023, which contributed to a sharp decline in its stock price, whipping out $32 billion in market value in a single day.

The ruling, made public on Tuesday by U.S. District Judge Trina Thompson in San Francisco, found that shareholders wrongly linked the $7 billion loss to Intel Foundry Services. According to the judge, investors were not misled about whether the unit’s financial results reflected Intel’s entire internal foundry operations.

The case also focused on comments from former CEO Patrick Gelsinger in March 2024. Gelsinger spoke of "significant traction" and "growing demand" for Intel's foundry services statements the court deemed not misleading, as they referred to specific customers rather than overall revenue. Despite the remarks, Intel later reported a $1.61 billion quarterly loss on August 1, 2024, announcing plans to lay off over 15,000 employees and suspend dividend payments to save $10 billion by 2025. The next day, Intel’s share price plunged 26%, erasing $32 billion from its market value.

While Intel declined to comment, the court has allowed plaintiffs the option to file an amended complaint. The tech giant, headquartered in Santa Clara, California, continues to face fierce competition from rival chipmakers as it works to capture growth opportunities in artificial intelligence.

PHOTO: REUTERS

This article was created with AI assistance.