(Nov 15): Intel has been sued by shareholders who accused the US chipmaker of defrauding them by concealing the impact of a prolonged slowdown in personal computer sales that caused its stock price to plunge nearly 29% in a single day.
In a proposed class action filed on Friday in the San Jose, California, federal court, shareholders led by a Michigan pension fund said Intel was too slow to disclose information about how slowing PC sales and an inventory glut would weigh on revenue.
The shareholders said Intel's problems with PC sales and excess inventory outweighed data center construction and other benefits related to the artificial intelligence boom.
They also said Intel had the motive and opportunity to defraud by raising capital in mid-August, halfway through its "disastrous" third quarter, when it sold $23 billion of stock at $95 per share.
The sale came as Intel looked to build out its chip contract manufacturing business, a key part of Chief Executive Lip-Bu Tan's business strategy. Shares of Intel closed Friday at $59.66.
Shares of Intel fell 28.6% on October 30, wiping out about $140 billion of market value, one day after the Santa Clara, California-based company projected lower-than-expected fourth-quarter revenue and profit and forecast a prolonged slowdown in PC sales.
Tan told analysts that he was disappointed by manufacturing supply shortages, an "unprecedented memory crunch," and resulting softness in PCs.
"We need to address these challenges with urgency," Tan added.
Like many other large technology companies, Intel has poured money into manufacturing, but supply disruptions have made it harder to benefit from growing demand for data center chips. Meanwhile, rising memory prices have made PCs more expensive, weighing on demand.
Friday's lawsuit, led by the City of Southfield Fire and Police Retirement System, seeks unspecified damages for Intel shareholders between July 23, 2026, and October 29, 2026. Tan and Chief Financial Officer David Zinsner are also defendants.
Uploaded by Siow Chen Ming