A U.S. federal judge has dismissed a shareholder lawsuit alleging that Intel Corporation misled investors by concealing mounting losses in its chip manufacturing business for external clients, known as the foundry division. The suit stemmed from a sharp market reaction last year that wiped out $32 billion in market value in a single day.
The decision, issued Wednesday by U.S. District Judge Trina Thompson in San Francisco, concludes that Intel did not violate securities laws by delaying the public disclosure of a $7 billion operating loss in its foundry operations for fiscal year 2023. Judge Thompson acknowledged the concerns raised by shareholders but ruled that Intel’s public statements and financial reports were not materially false or misleading.
“While the court understands plaintiffs’ frustrations,” Thompson wrote, “Intel made clear that foundry results would be obscured until 2024,” indicating that earlier disclosures aligned with expectations set by the company itself.
Foundry Ambitions and Investor Backlash
Intel launched its foundry business in 2021 as part of a strategic shift to manufacture chips not only for its own products but also for outside clients, including Amazon and Qualcomm. This move positioned Intel to compete with established players in contract chip manufacturing, such as Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Electronics.
However, the foundry venture struggled to gain traction. On August 1, 2024, Intel reported significant challenges, including $7 billion in annual losses tied to the foundry unit. The next day, its stock plummeted 26%, and the company announced a series of drastic cost-cutting measures: 15,000 layoffs, suspension of its dividend, and a plan to save $10 billion in 2025.
Shareholders filed suit shortly afterward, alleging that Intel’s executive team inflated the company’s stock price between January 25 and August 1, 2024, by withholding the severity of the foundry’s financial underperformance. Plaintiffs claimed they were misled into believing the venture was on stronger footing than reality revealed.
Judge Points to "Trial-and-Error" Nature of Foundry Strategy
In her 21-page ruling, Judge Thompson emphasized Intel’s own statements that the foundry initiative was experimental in nature. She cited an “overarching policy consideration” that companies should not be penalized for withholding unaudited, preliminary figures that could misrepresent performance or mislead the public.
The judge concluded that requiring disclosure of such early-stage financial data could deter companies from taking strategic risks or pursuing new ventures openly. As such, the court dismissed the case with prejudice, barring shareholders from refiling the suit.
This is the second time the court has ruled against the plaintiffs—the first dismissal occurred in March 2025, prompting a revised filing that has now been permanently shut down.
Broader Struggles Amid Competitive Pressures
The ruling arrives at a difficult time for Intel, which is facing intensifying competition in both consumer and enterprise chip markets. Rivals such as Nvidia, Advanced Micro Devices (AMD), and TSMC have surged ahead, particularly amid booming demand for AI-focused semiconductor technologies.
Intel posted a full-year loss of $18.8 billion in 2024, its first annual loss since 1986, marking a significant setback for a company long regarded as a foundational force in the global chip industry.
Neither Intel nor its legal team responded to requests for comment. Attorneys representing the shareholder plaintiffs also declined or did not respond.
Case Details
The case is titled In re Intel Corp Securities Litigation, filed in the U.S. District Court for the Northern District of California, case number 24-02683.