Intel Corporation has been hit with a proposed class action filed by an investor who claims a drop in stock price is linked to the company’s failure to disclose impending production delays for its 7-nanometer CPU technology.
According to the lawsuit, Intel and its top officers artificially inflated the company’s stock price for a three-month period while concealing from investors that a “defect mode” identified in the 7-nanometer process would delay production of the products, which were originally projected to ship in 2021.
The suit argues that the defendants were aware of the production delays, and the possibility that Intel would outsource production to third-party foundries, yet failed to disclose such to stockholders until July 2020, when the resulting drop in Intel stock price ultimately injured shareholders.
Per the complaint, Intel touted 7-nanometer CPU technology as being able to offer “double the area efficiency” of its 10-nanometer products and 20-percent higher performance per watt.
When the company announced its first quarter 2020 financial results on April 23, 2020, the defendants touted Intel’s 23-percent year-over-year revenue increase while failing to disclose any problems with its 7-nanometer technology, the lawsuit alleges.
After the market closed on July 23, however, Intel revealed to investors that it had “identified a defect mode in our seven-nanometer process that resulted in yield degradation,” which would cause a six-month delay in the production schedule, according to the suit. The company added that it was “reasonably likely” to outsource production to third-party foundries, the case says.
The plaintiff argues that the defendants unlawfully concealed from investors the problems with Intel’s 7-nanometer technology and the fact that, as a result of the aforementioned issues, the company was likely to lose market share to competitors who were already selling 7-nanometer products.
Upon Intel’s announcement, the company’s stock price reportedly dropped roughly 16 percent, injuring investors financially, the lawsuit says.
The plaintiff looks to represent any person or entity who purchased or otherwise acquired Intel securities between April 23 and July 23, 2020 and were damaged as a result.
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