Over the past few weeks, Intel has found itself in a mess of legal trouble over everything from CPUs that slowly fry themselves to allegations it misled investors about the chipmaker's well-being.

While these lawsuits will perhaps save the corporation's lawyers from CEO Pat Gelsinger's chopping block, the stock sell-off spurred by the decision to discontinue its quarterly dividend and slash its global workforce by at least 15 percent is, you guessed it, now at the center of yet another legal battle.

In a federal lawsuit filed [PDF] in northern California Wednesday, the Construction Laborer's Pension Trust of Greater St Louis alleged both Gelsinger and Intel CFO David Zinsner repeatedly hoodwinked investors about the health of Intel's fledgling foundry business.

Since the ousting of Bob Swan as chief exec in 2021, Gelsinger has aspired to transform the x86 titan into a contract manufacturing powerhouse second only to Taiwan's TSMC. These efforts have included massive investments in fabs across Arizona, Ohio, New Mexico, Ireland, Germany, and Israel totaling tens of billions of dollars.

The plaintiffs, who are seeking class-action status against Intel and its executive leadership, hope to make the case that between January 25 and August 1 this year, Gelsinger and Zinsner made misleading statements that misrepresented the health of the corp's foundry unit, inflating its share price in the process.

Unbeknownst to investors, however, Intel's foundry business was floundering

Over the past few years Intel executives have repeatedly predicted that its foundry business would contribute to a 60 percent gross margin and 40 percent operating margin, the suit contends.

"Unbeknownst to investors, however, Intel's foundry business was floundering, costing billions of dollars more than investors had been led to believe even while revenue growth in the division actually declined," the complaint reads.

As we reported earlier, much of this came to light in early April when Intel revealed its foundry business had slumped in 2023, leading to a $7 billion operating loss, with Gelsinger warning investors that 2024 would be nastier.

"As a result of defendants' wrongful acts and omissions, and the precipitous decline in the market value of Intel stock, plaintiff and other class members ... have suffered significant losses and damages for which they seek redress through this action," the complaint reads. In other words, the pension fund bought into Intel's stock, based on the manufacturer's claims, and now that as that stock is falling in value, its investment is tanking. These shareholders want something done about it.

In addition to class action status, the lawsuit is seeking compensatory damages along with whatever other relief the courts deem appropriate.

The lawsuit comes less than a week after Intel posted a $1.6 billion loss and announced it was laying off 15 percent or more of its workforce - amounting to more than 16,000 workers - and was suspending its quarterly dividend beginning in Q4 in a bid to cut spending by $10 billion in 2025.

Intel's share price went off a cliff, plummeting roughly 26 percent in the wake of the revelation. It currently stands at $20.49 apiece, down 42 percent over the past year, and down 55 percent over five years.

The Register reached out to Intel for comment; we'll let you know if we hear anything back.

Intel's legal trouble is piling up

This isn't the first case alleging Intel execs misled investors. In fact, this latest lawsuit closely mirrors one brought by Stourbridge Investments in late June.

Both cases argued that Intel management had made "materially false and misleading statements" related to the success of its foundry investments, resulting in steep drops in the value of investments made in the Xeon giant.

On the product side of the business, Intel is also taking significant heat over its 13th-and 14th-gen Raptor Lake Core desktop processors, which are experiencing crashes or outright death caused by excessive voltage being delivered to the CPUs. A microcode update this month is promised to correct that.

While Intel hopes that patch will prevent further damage and instability, and will be extending warranties by a further two years, that hasn't stopped several law firms from exploring class action suits against the x86 giant seeking compensation for those impacted by the engineering blunder.

Earlier this month Abington Cole + Ellery became one of the first to invite owners of Intel's 13th and 14th-gen Raptor Lake parts to join a proposed class action. Less than a week later, another law firm, Kaplan Gore, announced it too was exploring the possibility of a class action against Intel.

One bright spot in all of this is that last week Intel received a small victory when the High Court of England and Wales sided with the chip giant in a multinational patent dispute brought by R2 semiconductor.

R2 had alleged the x86 goliath had infringed on its voltage regulation tech, but upon further inspection, the judge determined the patent in question was invalid. But, while Intel was vindicated in that case, similar patent cases in Germany, France, and Italy are still ongoing. ®

https://www.theregister.com//2024/08/08/intel_legal_trouble_mounts/