Intel Faces Class Action Lawsuit for Alleged Misleading Statements

TapTechNews June 16th, Intel, the chip giant, is facing a class action lawsuit. Plaintiffs allege that when it reported its 2023 financial results in January this year, it did not properly disclose the loss situation of its manufacturing department. The lawsuit was initiated by Levi & Korsinsky law firm, which called on Intel investors to join the class action lawsuit against the company.

TapTechNews noted that since the first quarter of 2024, Intel has adopted what it calls the internal foundry model, and its product departments and external customers can purchase manufacturing and packaging services from the independent Intel Foundry department within Intel. Before that, Intel did not report the performance of its manufacturing department separately, but only the performance of the Intel Foundry Services department that sells manufacturing services to external customers.

On April 2nd, 2024, after Intel fully disclosed its department division plan, it had to recalculate the performance of Intel Foundry as an independent department in the past few years. The results showed that this department lost about 7 billion US dollars in 2023, leading to a sharp drop in Intel's share price. In addition, Intel also outsourced about 30% of its capacity to foundry chipmakers such as TSMC, which further angered investors. Intel announced the performance of its manufacturing department in the first quarter of 2024 (April 25th), showing that the loss of the Intel Foundry department in the first quarter of 2024 was 2.5 billion US dollars and the revenue was 4.4 billion US dollars. Since the beginning of the year, Intel's market cap has shrunk by about a third.

The complaint alleges that Intel exaggerated the growth and profit of its Intel Foundry Services department, which actually suffered huge losses in 2023, and the profit of products also decreased, making the company's positive statements about its foundry strategy misleading.

The complaint specifically enumerates the alleged false statements or concealment behaviors of Intel, including:

(1) The growth of Intel Foundry Services does not represent the reportable revenue growth of the internal department;

(2) The Intel Foundry department suffered significant operating losses in 2023;

(3) Due to the decline of internal revenue, the profit of products of this department has declined;

(4) Therefore, the foundry model will not be a strong driving force for the company's integrated packaging and testing (IFS) strategy;

(5) Due to the above reasons, the defendant's positive statements about the company's business, operations and prospects are substantively misleading or lack a reasonable basis.

Any investor who believes that they have suffered losses due to holding Intel stocks from January 24th to April 25th, 2024 can apply to be the lead plaintiff, and the deadline is July 2nd, 2024.