Levi & Korsinsky, a class action attorneys' firm, is calling Intel investors to join a class action suit against the company. The suit alleges that the semiconductor giant failed to properly disclose losses generated by its manufacturing division in January when it reported its 2023 results.
Starting Q1 2024, Intel adopted its so-called 'internal foundry' model, under which its product divisions and external clients would buy manufacturing and packaging services from Intel Foundry, an independent division within Intel. Before Q1 2024, Intel did not report the results of its manufacturing division separately; instead, it only published the results of its Intel Foundry Services unit that sold manufacturing services to external customers.
After Intel fully disclosed its plans about segments reporting on April 2, 2024, it had to recast results of Intel Foundry as a separate entity for several previous years, and it turned out that in 2023, the newly formed divisionlost some $7 billion, which sent Intel stock to a downward spiral. It also turned out that Intel outsources roughly 30% of its production to TSMC and other contract chipmakers; this upset investors even further. When the company reported results of its manufacturing arm in Q1 2024 (on April 25, 2024), it turned out that Intel Foundry lost $2.5 billion on revenue of $4.4 billion in Q1 2024. About one-third of Intel's capitalization has been lost since the beginning of the year.
The complaint alleges that Intel's Foundry Services's growth and profit were misrepresented, experiencing significant losses and declining product profit in 2023. This led to misleading positive statements about the Company's business and Intel Foundry strategy. This is whatLevi & Korsinsky's filed class action suit is all about.
Here is the description of the case by the class action attorneys. The filed complaint alleges that the defendants made false statements and/or concealed that:
(1) the growth of Intel Foundry Services was not indicative of revenue growth reportable under the Internal segment; (2) the Foundry experienced significant operating losses in 2023; (3) the Foundry experienced a decline in product profit driven by lower internal revenue; (4) as a result the Foundry model would not be a strong tailwind to the Company's IFS strategy; and (5) as a result of the foregoing, defendants' positive statements about the Company's business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
Investors who believe they lost money on Intel's stock from January 24 to April 25, 2024, have until July 2, 2024, to request to be the lead plaintiff.
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Anton Shilov
Freelance News Writer
Anton Shilov is a Freelance News Writer at Tom’s Hardware US. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.
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28 CommentsComment from the forums
NeoMorpheus Intel caught doing illegal things?
No way, they dont do such things, right Dell?
Lol
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Amdlova Intel never do such things...
They are the saints over all industryReply
Alvar "Miles" Udell Probably will end up like the AMD Bulldozer lawsuit where plantiffs end up with $25.
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USAFRet Alvar Miles Udell said:
Probably will end up like the AMD Bulldozer lawsuit where plantiffs end up with $25.Just like every other "class action" lawsuit.
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redgarl By 2030, Intel will be in a death spiral that will eventually make their business model unsustainable. Going against TSMC was a mistake.
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redgarl Alvar Miles Udell said:
Probably will end up like the AMD Bulldozer lawsuit where plantiffs end up with $25.We are talking about shareholders... a totally different game.
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TerryLaze Alvar Miles Udell said:
Probably will end up like the AMD Bulldozer lawsuit where plantiffs end up with $25.USAFRet said:
Just like every other "class action" lawsuit.Not like every other, most of them never manage to get to court, this one also, if you read the article the last line says that they are still searching for someone that actually lost (enough) money to be the main plaintiff.
If nobody steps forward this will also just go away just like most other ones.
And since those that lose a lot of money are professionals that would mean that they would have to admit publicly that they screwed up and that would lose them a lot of business.Reply
USAFRet TerryLaze said:
Not like every other, most of them never manage to get to court, this one also, if you read the article the last line says that they are still searching for someone that actually lost (enough) money to be the main plaintiff.
If nobody steps forward this will also just go away just like most other ones.
And since those that lose a lot of money are professionals that would mean that they would have to admit publicly that they screwed up and that would lose them a lot of business.I should have specified..."some other", instead of "every other".
Consider the price fixing for CD's, long ago.
Sony, et al were convicted of colluding to artificially raise the retail price of music CD's.Given the artificial price raise, and how many CD's I had purchased....I was out $250+.
Eventually, I got a check for $3.50.Reply
Alvar "Miles" Udell TerryLaze said:
Not like every other, most of them never manage to get to court, this one also, if you read the article the last line says that they are still searching for someone that actually lost (enough) money to be the main plaintiff.
If nobody steps forward this will also just go away just like most other ones.
And since those that lose a lot of money are professionals that would mean that they would have to admit publicly that they screwed up and that would lose them a lot of business.Which is true for some stocks, stocks which aren't held by institutions, but this is Intel. Being Intel, they have a large amount of shares held by institutions (I'll just quote the Yahoo Finance table for brevity). Since they are looking for shareholders who lost money during the period, not just shareholders who bought during the period, it makes them all fair game. Vanguard and Blackrock alone total well over half a billion shares, so even if the recovery to shareholders were to be 20% of lost value (about $2 a share as it dropped $10 a share during the class period), it's a significant amount of fee for the lawyers, so it won't be dropped, and the lead plaintiff will likely be a state or institution rather than one specific person.
Top Institutional HoldersHolderSharesDate Reported% OutValueVanguard Group Inc389.1MMar 31, 20249.14%11,848,047,642Blackrock Inc.343.93MMar 31, 20248.08%10,472,775,672State Street Corporation190.4MMar 31, 20244.47%5,797,585,354Capital International Investors112.09MMar 31, 20242.63%3,413,249,657Geode Capital Management, LLC86.31MMar 31, 20242.03%2,628,104,822Primecap Management Company76.13MMar 31, 20241.79%2,318,007,434Morgan Stanley50.98MMar 31, 20241.20%1,552,402,426Norges Bank Investment Management48.24MDec 31, 20231.13%1,468,993,936Northern Trust Corporation42.73MMar 31, 20241.00%1,301,249,175Barclays Plc40.99MMar 31, 20240.96%1,248,212,612
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steve15180 What I don't get is how they figured they were cheated? I mean, 14nm was late to the party, but stuck around through 14+++++++++++ because 10nm was screwed from the get go. They lost foundry customers during all of this and wound up in a mess. Unless you count their renaming scheme 10=7, 7=5. and who knows what 20A actually is, their track record in chipmaking recently has been screwed for a long time, and as Pat said, it's going to take time to "fix", if it can be fixed.
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