Former Intel CEO faces charges of causing financial damage

Intel faces legal pressure from shareholders

According to Wccftech , former Intel CEO Pat Gelsinger and current CFO David Zinsner are facing a lawsuit from shareholder LR Trust, accusing both of giving misleading information about the financial situation of the Intel Foundry Services (IFS) division. This is one of the business segments that was expected to become a new growth driver for Intel, but instead caused huge losses.

LR Trust, the shareholder who filed the lawsuit, is seeking up to $207 million in compensation, which is said to be the salary and benefits Pat Gelsinger received from 2021 to 2023 while serving as Intel's CEO. The lawsuit claims that Intel's optimistic reports on IFS's performance misled shareholders, causing them to continue investing even though the division failed to meet its promised revenue or customer targets.

Intel Foundry Services aims to compete in the semiconductor market with Intel 18A process, but faces challenges in product performance and customer attraction

Intel Foundry Services, which was created to compete directly with rivals such as TSMC and Samsung, was initially touted as a core element of Intel’s strategy to reposition itself in the semiconductor market. However, IFS failed to meet expectations as it failed to attract large contracts from key customers. In 2023, IFS recorded an operating loss of up to $7 billion, which is expected to continue into 2024.

The lawsuit filed by LR Trust in federal court in San Jose, California, alleges that Intel, under Gelsinger’s leadership, failed to maintain effective internal controls. This resulted in financial statements that did not accurately reflect the business. In addition, Intel’s expectations for IFS, including its ability to grow and contribute to revenue, were allegedly unfounded.

This is not the first time Intel has been sued over its strategy. A similar lawsuit was filed in August this year, raising questions about the company’s management and strategic direction. These back-to-back lawsuits could expose Intel to serious legal consequences and undermine shareholder confidence.

The uncertain future of Intel Foundry

In addition to the pressure from the lawsuits, Intel also faces internal financial and competitive challenges. Despite high demand in the global semiconductor market, Intel is struggling to find a position in the Foundry market. IFS, which was expected to be a key part of this strategy, has become a financial burden as it fails to meet its business goals.

Many experts believe that with the current problems, Intel may be forced to sell the Foundry division to reduce financial pressure. This may be a difficult but necessary decision, especially when the company has spent billions of dollars investing in IFS but has not seen clear results.

As former Intel CEO, Pat Gelsinger left his mark with the controversial Foundry strategy, which led to heavy losses and shareholder lawsuits.

Former CEO Pat Gelsinger, who was once expected to return Intel to the top of the semiconductor industry, is now the center of criticism and controversy. Although he has left the top job, his strategic decisions have had a lasting impact on the company.

The lawsuit is still in its early stages and it will take time to clarify the allegations. However, with both market and legal pressure, Intel is facing a challenging period, the outcome of which could affect the company's position in the global semiconductor industry.

Source: https://thanhnien.vn/cuu-ceo-intel-doi-mat-cao-buoc-gay-thiet-hai-tai-chinh-185241222114423028.htm