Intel won the dismissal of a shareholder lawsuit accusing the chipmaker of fraudulently concealing problems in its foundry business, leading to job cuts and a dividend suspension that wiped out more than $32 billion of market value in one day.
TakeAway Points:
- A lawsuit filed by shareholders accusing Intel of deceitfully hiding issues in its foundry sector, which resulted in job losses and a suspension of dividends, wiping away almost $32 billion in market value in a single day, was dismissed.
- Intel’s share price fell 26% the next day after the lawsuit was filed, resulting in the $32 billion loss of market value.
- The satellite broadband company’s attempt to leverage its early-mover advantage in the low-orbit space-based telecommunications market against lagging European and American competitors is indicated by its request for access to E-band frequencies in Italy.
Intel won lawsuit
In a decision made public on Tuesday, U.S. District Judge Trina Thompson in San Francisco rejected claims that Intel took too long to reveal a $7 billion fiscal 2023 operating loss linked to its business of making chips for outside customers.
Intel did not disclose the loss until last April, when it made changes to how it reported financial results.
But the judge said shareholders incorrectly attributed the $7 billion loss to the Intel Foundry Services business unit and were not misled into believing the unit’s reported results “included results for the entire Internal Foundry Model.”
Thompson also said statements last March by former Chief Executive Patrick Gelsinger that Intel was enjoying “significant traction” and “growing demand for our foundry offering” were not misleading because they concerned specific customers rather than overall revenue, which was falling.
Lawyers for the shareholders did not immediately respond on Wednesday to a request for comment. Intel declined to comment. Thompson said the plaintiffs may file an amended complaint.
The lawsuit accused Intel of inflating its stock price from January 25 to August 1, 2024, when Intel posted a $1.61 billion quarterly loss and said it would lay off more than 15,000 people and suspend its dividend to help save $10 billion in 2025.
Intel’s share price fell 26% the next day, resulting in the $32 billion loss of market value.
The Santa Clara, California-based company has struggled to fend off competition from rival chipmakers and benefit from growth in artificial intelligence.
Its rivals include Nvidia, Advanced Micro Devices, Samsung Electronics and Taiwan’s TSMC. Intel ousted Gelsinger in December.
The case is In re Intel Corp Securities Litigation, U.S. District Court, Northern District of California, No. 24-02683.
Starlink has asked Italy for access to more spectrum
The request for access to E-band frequencies in Italy signals the satellite broadband company’s push to capitalise on its first-mover role in the low-orbit space-based telecommunications sector against lagging European and U.S. rivals.
Starlink, which is part of Musk’s SpaceX space company, has been offering its service in Italy since 2021. It operates a network of thousands of low-orbit satellites and is emerging as a dominant force in the sector globally.
One of the people said Starlink had applied for access to frequencies in the 71.0–76.0 gigahertz and 81.0–86.0 GHz bands, to which the satellite broadband operator was granted conditional access in the United States last year.
The E-band spectrum is managed by Italy’s minister of industry and minister of defence. The latter must authorize the use of some of the frequencies.
But no final response had been given so far, the sources said.
Addressing lawmakers on satellite spectrum policy on Wednesday, Industry Junior Minister Massimo Bitonci said Rome was taking a cautious approach to E-band in the absence of a common stance on the issue at the European Union level.
“The E-band is not yet subject to harmonisation decisions … This prompts us to wait for EU-wide coordination,” Bitonci added, without mentioning Starlink’s request nor indicating when such coordination could happen.
Access to other markets
As of January, Starlink had about 55,000 customers in Italy out of a population of nearly 60 million.
“E-band is little tapped, and consequently any risk of Starlink interfering with other operators is low,” said Antonio Sassano, a former engineering professor at La Sapienza University who served as an adviser to Italian governments and the communications authority.
“Having access to those frequencies would increase Starlink’s capacity to serve more customers and would also give Starlink a potential first mover advantage because any newcomer would have to coordinate with Starlink to offer its service,” Sassano said.
Starlink is considering deploying an additional ground station in northern Italy to meet higher-than-expected demand for its service in the wealthiest areas of Italy, the first person said.
This source added that Starlink is also reviewing whether to reduce the number of its stations in southern Italy, where demand was below its initial expectations.
Musk, now also an adviser to U.S. President Donald Trump, has a friendly relationship with Italian Prime Minister Giorgia Meloni.
Italy is in talks with Starlink to provide a secure communications system for diplomats, military and government officials operating in risky areas across the globe.
It is also considering the use of Starlink’s satellite network to boost Internet penetration in remote and underserved areas of the country.
Both projects, however, are progressing slowly amid criticism from opposition parties.
