Intel shareholders have filed a derivative lawsuit against the company, alleging executives, including former CEO Pat Gelsinger, made false and misleading statements about the reorganization of a manufacturing segment.

First reported by Bloomberg Law, the lawsuit accuses Intel executives, including former CEO Pat Gelsinger, of violating federal securities law, breaching fiduciary duties, and other misconduct, which “resulted in substantial damage to the Company and its stockholders.”

Intel Logo
– Sebastian Moss

A derivative lawsuit is one bought forward by shareholders on behalf of a corporation against its directors or executives who are thought to be in breach of their duties. Any damages awarded as a result of a derivative lawsuit would be awarded to the corporation, instead of the shareholders.

The allegations relate to statements made by Intel about the reorganization of its manufacturing business segments in February 2024, when the company announced it would be separating its Product and Foundry lines into two separate businesses. At the time, it also said that it would be implementing a new financial reporting system under which Intel Foundry would be responsible for its own reportable profits and losses.

Under the new reporting model – which Intel said was designed to “drive increased cost discipline and higher returns by providing greater transparency, accountability and incentives across the business” – the company said it would report results from Foundry as a standalone operating segment, while results from Client Computing Group (CCG); Data Center and AI (DCAI); and Network and Edge (NEX) will fall under the Intel Products heading.

A month later, the newly carved-out Foundry unit reported $7 billion in operating losses in 2023, with the business unit’s revenue totaling $18.9 billion, a 31 percent decline from the $27.49 billion it made in the year prior.

Intel was hit by a separate but similar derivative lawsuit in June 2024 in which Stourbridge Investments alleged the company made "materially false and misleading statements" about its Foundry business.

A federal lawsuit was also filed in San Jose, California, by an individual named Mark Vanvalkenburgh, who alleged Intel’s Raptor Lake desktop processors were “defective, unstable, and crashing at high rates,” but the company continued to develop and sell the chips without making customers aware of the problems.

The shareholders from the most recent lawsuit are seeking restitution and punitive damages from the individual defendants, in addition to court costs. Intel declined to respond to a request for comment from DCD.

Intel has had something of a tumultuous year, making headlines for the successive quarters in which the company reported billions of dollars in losses, resulting in the chipmaker laying off 15,000 employees, stalling construction on its proposed fabs, and announcing the ’retirement’ of its CEO, Pat Gelsinger.

Despite the drama, interim co-CEOs Dave Zinsner and MJ Holthaus said the company remains focused on “building world-class products and a world-class foundry.”