This legal action comes just days after the company announced the suspension of dividends and the planned layoff of over 15,000 employees. At its lowest point, this share price decline wiped over $32 billion off Intel's market value in a single day.
Shareholders claim they were blindsided by Intel's August 1 announcement, in which the company revealed that its contract foundry was underperforming. According to Reuters, this additional cost, combined with a staggering 99 per cent drop in revenue in Q2 2024, led to a $1.61 billion net loss for the semiconductor giant.
The proposed class action suit names Intel, CEO Pat Gelsinger, and CFO David Zinsner as respondents. The petitioners allege that "[the] company's materially false or misleading statements regarding the business and its manufacturing capabilities inflated its stock price from 25 January to 1 August."
The case was filed in San Francisco federal court by the Construction Laborers Pension Trust of Greater St. Louis. However, this is not the only legal challenge Intel is facing. A patent dispute with R2 Semiconductor over voltage regulation technology is also looming in several European countries.
Although Intel recently won its case against R2 in the UK, it is still battling an appeal in Germany, where it lost the case. Additionally, there are pending cases in France and Italy. Another class action lawsuit is being investigated on behalf of customers who purchased 13th- and 14th-gen chips affected by Intel's instability issues.
Beyond these legal battles and the Raptor Lake problems, Intel is also trailing behind its competitors.
AMD has recently released its highly anticipated Ryzen 9000-series processors, and Nvidia continues to dominate the AI processing market. Meanwhile, TSMC, Samsung, and HK Hynix are capitalising on the AI boom, producing cutting-edge processors and components.
Intel is perhaps hoping for some respite with the launch of its next-generation processors, dubbed Lunar Lake, expected in September. However, the instability issues of its 13th- and 14th-gen chips are currently overshadowing the new releases.
Unless the company resolves these issues soon, it risks losing market share and potentially ceding the x86 crown to AMD for the first time since the competition began.