Intel hit with lawsuit over $32 billion loss, shareholders complain company hid problems

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Was Intel hiding its big problems all along?

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(Image credit: Getty Images)

Intel shareholders are suing the company in the wake of its share price rapidly plummeting. The legal action comes days after Intel announced the suspension of dividends and the planned layoff of over 15,000 employees. At its worst, this share price drop wiped over $32 billion off Intel's market value in a single day.

Shareholders said they were blindsided by Intel's August 1 announcement, with the company explaining that its contract foundry wasn't performing as expected. Reuters says this additional cost, combined with a 99% drop in revenue in 2Q24 led to a $1.61 billion net loss for the semiconductor giant.

The proposed class action suit lists Intel, CEO Pat Gelsinger, and CFO David Zinsner as the respondents. According to the petitioners, "[the] company's materially false or misleading statements regarding the business and its manufacturing capabilities inflated its stock price from Jan. 25 to Aug. 1." The case was filed in San Francisco federal court by the Construction Laborers Pension Trust of Greater St. Louis, but itis not the only lawsuit that the company is facing. A patent spat with R2 Semiconductor in several European countries, regarding a voltage regulation technology patent, also looms on the horizon.

Although the company has recently won its case against R2 in the U.K., it's still fighting an appeal battle in Germany where it lost the case, plus there are looming cases filed in France and Italy. Another class action lawsuit on behalf of customers who bought 13th- and 14th-gen chips affected by the Intel instability issue is being investigated by another law firm.

Aside from these legal battles and the Raptor Lake problems, the company is also lagging behind its competitors, with AMD releasing its much-anticipated Ryzen 9000-series processors in August and Nvidia securely holding the crown in AI processing. TSMC, Samsung, and HK hynix are also raking in the benefits of the AI rush on the chip manufacturing side of things, with these companies busy churning out leading-edge next-generation processors and supporting components to power AI.

Intel perhaps hopes for some reprieve with its next-generation processors, dubbed Lunar Lake, expected to launch in September with nine SKUs. However, the instability issues of its 13th- and 14th-gen chips are currently grabbing headlines and overshadowing the new chips. Unless the company fixes all these issues soon with the support of its systems and board partners, it risks losing market share and passing the x86 crown to AMD for the first time since the race began.  

Jowi Morales
Jowi Morales
Contributing Writer

Jowi Morales is a tech enthusiast with years of experience working in the industry. He’s been writing with several tech publications since 2021, where he’s been interested in tech hardware and consumer electronics.

45 Comments Comment from the forums
  • Taslios
    .... I really thought about putting a short call on INTL back at the end of July.... alas...

    So much mud is going to be thrown at Intel over the next few months. Lunar lake and Arrow lake need to be flat out a amazing.

    I do not want an AMD monopoly...
    Reply
  • Makaveli
    Taslios said:
    .... I really thought about putting a short call on INTL back at the end of July.... alas...

    So much mud is going to be thrown at Intel over the next few months. Lunar lake and Arrow lake need to be flat out a amazing.

    I do not want an AMD monopoly...
    AMD cannot supply enough to the market to have a monopoly.
    Reply
  • Taslios
    Makaveli said:
    AMD cannot supply enough to the market to have a monopoly.
    Nvidia is basically a monopoly and they manufacture at the same location as AMD.

    If Intel implodes, AMD will be able to set their price and buy TSMC fabs.. (or pay them for exclusive use/ increased fab construction)

    Either way intel's struggles are not a good thing for the industry.
    Reply
  • tennis2
    Toms:
    combined with a 99% drop in revenue in 2Q24 led to a $1.61 billion net loss

    Reuters (source):
    Intel also posted a $1.61 billion second-quarter net loss, as revenue fell 1% to $12.83 billion


    Math is hard.
    Reply
  • Makaveli
    Taslios said:
    Nvidia is basically a monopoly and they manufacture at the same location as AMD.

    If Intel implodes, AMD will be able to set their price and buy TSMC fabs.. (or pay them for exclusive use/ increased fab construction)

    Either way intel's struggles are not a good thing for the industry.
    Nvidia's monopoly is far bigger than just manufacturing there are other factors.

    1. They are a much larger company bringing in more revenue
    2. CUDA Software lock in for AI
    3. Marketing and brand loyaly when you have people that will pitch a tent infront of bestbuy for a new gpu launch.

    AMD cannot afford to buy TSMC nor would that purchase be allowed.

    Remove TSMC from both AMD and Nvidia they go back to samsung and everythign continues on for NV. AMD would be in a much worse position.
    Reply
  • jp7189
    Taslios said:
    Nvidia is basically a monopoly and they manufacture at the same location as AMD.

    If Intel implodes, AMD will be able to set their price and buy TSMC fabs.. (or pay them for exclusive use/ increased fab construction)

    Either way intel's struggles are not a good thing for the industry.
    Nvidia dominates a relatively small market (by volume) compared to the much larger general CPU market. Also, fabs are Hella expensive. From a market cap pov, tsmc is many times larger than AMD. Zero chance of a buyout. That said, Intel is now manufacturing much of it silicon at tsmc (never thought I'd see the day), so there's an argument to be made that in some markets Intel now has the same volume limits that AMD does.
    Reply
  • Taslios
    jp7189 said:
    Nvidia dominates a relatively small market (by volume) compared to the much larger general CPU market. Also, fabs are Hella expensive. From a market cap pov, tsmc is many times larger than AMD. Zero chance of a buyout. That said, Intel is now manufacturing much of it silicon at tsmc (never thought I'd see the day), so there's an argument to be made that in some markets Intel now has the same volume limits that AMD does.
    and I'm not saying they will be able to supply the market.

    But intel is in danger of being split up, or unlikely but possible out right collapse if Lunar/Arrow Lake have issues or the extent of the lawsuits throw enough mud.

    AMD without any real direct competition in the CPU market will be disastrous for many many reasons... not only that they cannot actually supply the needed number of processors.
    Reply
  • jp7189
    Taslios said:
    and I'm not saying they will be able to supply the market.

    But intel is in danger of being split up, or unlikely but possible out right collapse if Lunar/Arrow Lake have issues or the extent of the lawsuits throw enough mud.

    AMD without any real direct competition in the CPU market will be disastrous for many many reasons... not only that they cannot actually supply the needed number of processors.
    Agreed. I very much want to see Intel turn it around. They need another Keller hail mary. His last stint was barely enough to give them a lifeline. Rumors of internal politics and exec egos apparently limited his effectiveness. Until those get out of the way, I fear Intel is screwed.
    Reply
  • Taslios
    jp7189 said:
    Agreed. I very much want to see Intel turn it around. They need another Keller hail mary. His last stint was barely enough to give them a lifeline. Rumors of internal politics and exec egos apparently limited his effectiveness. Until those get out of the way, I fear Intel is screwed.
    Intel doesn't know how not to be #1 and their ego may be a weight to heavy to bear... lot of the old school upper management probably need to go for them to have a prayer. I'm not sure if Pat is part of the problem, or if he was just too late to the rudder to save the ship from the storm thrashed rocks.
    Reply
  • Vanderlindemedia
    AMD spun off their own fabs years ago. On paper now they are a designer of chips, but not a manufactor. Intel on the other hand is having fabs but battles with tech advancements compared to TSMC. It's this that will f up intel for some time to come.
    Reply