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 division lost 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 what Levi & 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.
