Intel sued by its shareholders

Intel was recently sued by its shareholders, who claim that the chip production company has "fraudulently concealed problems" that led to lower market value, job cuts, and divided suspension, among other issues. 

The proposed class action against Intel, Chief Executive Patrick Gelsinger, and Chief Financial Officer David Zinsner was filed in San Francisco federal court.

Shareholders said they were blindsided when Intel revealed on August 1 that its so-called foundry business for making chips on contract for outsiders was, in their words, "floundering", costing billions of dollars extra even as revenue declined. They said the Santa Clara, California-based company's materially false or misleading statements regarding the business and its manufacturing capabilities inflated its stock price from January 25 to August 1.

Intel had no immediate comment.

The lawsuit came after Intel said last Thursday it would lay off more than 15% of its workforce, or more than 15,000 jobs, and suspend its dividend starting in the fourth quarter as part of a restructuring meant to save $10 billion in 2025. Intel also posted a $1.61 billion second-quarter net loss, as revenue fell 1% to $12.83 billion.

The company has struggled to fend off competition from rival chipmakers and benefit from growth in artificial intelligence. Among its rivals are Advanced Micro Devices, Nvidia, Samsung Electronics, and Taiwan's TSMC.

Intel's share price tumbled 26% to $21.48 on August 2, the day after it announced quarterly results, the job cuts and the dividend suspension. The shares closed Wednesday down 3.6% at $18.99 and have fallen 34.6% since the announcement.