On Monday in the Northern District of California, plaintiff James E. Thorsen filed a securities fraud class-action complaint against Intel Corporation and two of its executives for misleading investors about the company’s financial welfare and a forthcoming product rollout, causing putative class members to purchase shares at artificially inflated prices then experience losses once the stock fell. Specifically, the plaintiff accused Intel, a tech company “that provides computing, networking, data storage, and communication solutions worldwide,” of materially misleading investors about the timing of Intel’s 7-nanometer central processing unit (7-nm CPU) technology product debut.
The complaint asserted that Intel praised its 7-nm CPU technology as offering “double the area efficiency of 10-nanometer products, and [] offer[ing] 20% higher performance per watt.” According to the plaintiff, in May 2019, Intel projected its first 7-nm products to ship in 2021. However, following the close of the market on July 23, Intel disclosed that it was experiencing manufacturing delays for its 7-nm CPU products. The reason, Intel explained, was the identification of a “defect mode in [its] seven-nanometer process that resulted in yield degradation.” This pushed the 7-nm CPU product timeline back approximately six months, and may have caused Intel to rely on external foundries to manufacture the products, the complaint said.
The news, the plaintiff contended, caused Intel’s share price to fall $9.81 per share, or approximately 16%, to close at $50.59 the following day. The plaintiff argued that Intel failed to make investors aware that the company had identified a defect, that it would experience a half-year delay, and that it was reasonably likely to rely on third-party manufacturers to make the product.
The complaint also claimed that “Intel was reasonably likely to lose market share to its competitors who are already selling 7-nanometer products,” and that “Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.” Thus, Intel’s omissions and misstatements caused the plaintiff and proposed class, who bought Intel common stock between April 23 and July 23 of this year, to overpay for the security and to lose value once it “dropped precipitously,” according to the complaint.
The plaintiff is represented by Pomerantz LLP.
