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Central District Of California Denies Motion To Dismiss Securities Class Action Against Semiconductor Company
06/09/2026On May 6, 2026, Judge David O. Carter of the United States District Court for the Central District of California denied a motion to dismiss a proposed securities class action against a semiconductor company (the “Company”) and its former CEO and CFO (“Individual Defendants,” and, collectively, the “Defendants.”). Cesar Nunez v. Skyworks Solutions, Inc. et al., No. 8:25-cv-00411-DOC-JDE (C.D. Cal. May 6, 2026). The complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 based on alleged misrepresentations concerning the Company’s sale of semiconductors to Apple for the iPhone 16 and iPhone 17. The Court held that Plaintiffs adequately pleaded actionable omissions, scienter, and control-person liability.
On May 6, 2026, Judge David O. Carter of the United States District Court for the Central District of California denied a motion to dismiss a proposed securities class action against a semiconductor company (the “Company”) and its former CEO and CFO (“Individual Defendants,” and, collectively, the “Defendants.”). Cesar Nunez v. Skyworks Solutions, Inc. et al., No. 8:25-cv-00411-DOC-JDE (C.D. Cal. May 6, 2026). The complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 based on alleged misrepresentations concerning the Company’s sale of semiconductors to Apple for the iPhone 16 and iPhone 17. The Court held that Plaintiffs adequately pleaded actionable omissions, scienter, and control-person liability.
The Company allegedly supplies semiconductor components to technology companies, with Apple allegedly accounting for approximately 69% of the Company’s total revenue. According to plaintiffs, former Company employees with knowledge of Apple’s procurement process said that Apple decided to move away from single-sourcing certain chip components from the Company by at least March 2023, starting with the iPhone 16. Plaintiffs further allege that Defendants nevertheless made optimistic statements about the Company’s relationship with Apple and its expected content growth. When Defendants disclosed in April 2024 that the Company expected losses of business with respect to the iPhone 16, the Company’s share price allegedly declined by 15%. And when Defendants disclosed additional expected losses with respect to the iPhone 17 in February 2025, the share price allegedly fell by another 25%. Individual Defendants allegedly left the Company shortly thereafter.
The Court first held plaintiffs adequately alleged that Defendants knew but failed to disclose that Apple would reduce its reliance on the Company’s components. Although Defendants argued that the former employees did not have direct contact with the Individual Defendants, the Court held it was implausible that these employees would have been aware of information about the Company’s largest customer that the Individual Defendants—the Company’s top executives—would not know.
The Court then held that plaintiffs’ allegations gave rise to a strong inference of scienter. In so holding, the Court found persuasive allegations that Apple communicated final decisions to the Company in the spring or early summer before each iPhone launch, that former employees knew by March 2023 that Apple decided to move away from single-sourcing, and that the Individual Defendants were the Company’s most senior officials at a time when the Company derived nearly 70% of its revenue from Apple. The Court also credited allegations that one of the Individual Defendants—the Company’s former CEO—regularly presented to employees regarding the Company wins and losses in Apple’s bidding process, supporting an inference that he was positioned to know about component-level losses.
The Court also held that plaintiffs did not need to plead a financial motive where they otherwise alleged particularized facts supporting deliberate recklessness or fraudulent intent. The Court further held the core-operations doctrine supported an inference of scienter, particularly because plaintiffs alleged that the former CEO was a “primary source” of Company information on chipset bidding and manufacturing. Finally, the Court concluded that the timing and context of the Individual Defendants’ exits—together with the new CEO’s statements that the Company had not been “performing that well” and had become “too complacent”—supported an inference of scienter.
Finally, the Court sustained plaintiffs’ Section 20(a) claim, finding plaintiffs adequately alleged Individual Defendants shared significant responsibility for strategic decisions and the accuracy of the Company’s SEC filings. The Court therefore denied Defendants’ motion to dismiss.
