Intel is currently facing a class-action lawsuit that accuses the company of misleading investors about the financial performance of its foundry. The lawsuit, filed by law firm Levi & Korsinsky, invites Intel investors to join the legal action against the chipmaker. The lawsuit claims that Intel failed to disclose the losses incurred by its manufacturing division accurately during its financial reports in January 2023.
The allegations made in the lawsuit suggest that Intel misrepresented the growth and profitability of its Foundry Services. The lawsuit states that there were significant losses and a decrease in product profits in 2023, which led to misleadingly positive statements about Intel’s business and internal foundry strategy. Intel’s ‘in-house foundry’ model, implemented in Q1 2024, required product divisions and external customers to purchase manufacturing and packaging services from Intel Foundry, an independent division within the company.
Prior to Q1 2024, Intel did not disclose the financial results of its manufacturing division separately, reporting only the results from its Intel Foundry Services unit that catered to external clients. However, the company’s review of its financial results in recent years revealed that they were not meeting expectations. The revelation that Intel Foundry suffered a $7 billion loss in 2023 had a significant impact on the company’s stock prices.
Concerns among investors grew when it was uncovered that Intel outsources a substantial portion (around 30%) of its chip production to companies like TSMC. Moreover, Intel’s Q1 2024 earnings report disclosed ongoing losses for Intel Foundry, with a loss of $2.5 billion on $4.4 billion in revenue. Consequently, Intel’s overall stock value plummeted by approximately one-third in 2024.
The lawsuit against Intel highlights the alleged discrepancies in the company’s reporting of its foundry’s financial performance, leading to misleading information that affected investors’ decisions and the company’s stock value. Intel’s shift to an in-house foundry model in 2024 and its subsequent financial revelations have raised concerns about the company’s ability to sustain profitability and compete effectively in the semiconductor industry. The legal action taken by investors aims to hold Intel accountable for its alleged misrepresentation of financial results and to seek compensation for any damages incurred as a result.
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https://timesofindia.indiatimes.com/technology/tech-news/how-intels-internal-foundry-model-is-causing-problems-for-the-company/amp_articleshow/111063209.cms