Intel has disclosed plans to downsize its employment by more than 15%, or around 15,000 individuals, in order to cut expenses. In the latest development, Intel shareholders have sued the chipmaker. According to Reports, the shareholders argue that the company's stock price was inflated between January 25 and August 1 due to substantially false or misleading representations regarding the firm and its production capabilities.

Intel's stock fell 26% to $21.48 on August 2, the day after the company reported quarterly results, job layoffs, and dividend suspension. A proposed class action against Intel, Chief Executive Patrick Gelsinger, and Chief Financial Officer David Zinsner was filed in San Francisco federal court.

Why are shareholders suing Intel?

Intel stockholders claim that the firm deliberately hid difficulties, resulting in employment layoffs, dividend suspension, and poor outcomes.

“Shareholders said they were blindsided when Intel revealed on Aug. 1 that its so-called foundry business for making chips on contract for outsiders was in their words "floundering," costing billions of dollars extra even as revenue declined,” the report states.

Previous job cutbacks at Intel

Intel previously announced job layoffs for October 2022. In 2023, it cut its staff by around 5%. The business estimated that these cost cuts will save up to $10 billion by 2025.

Earlier this year, Intel laid off around 62 people at its headquarters in Santa Clara, California. Christoph Schell oversaw the personnel decrease in the Sales and Marketing Group.

Despite being a key participant in the desktop computer and server industries, Intel has struggled to keep up with increased demand for artificial intelligence (AI) chips, competing with Advanced Micro Devices, Nvidia, Samsung Electronics, and Taiwan's TSMC.tions.