VSCode intellisense not working for solidity files when using hardhat-foundry

[tmigone]

Version of Hardhat

2.22.2

What happened?

IntelliSense in VSCode stops working when adding @nomicfoundation/hardhat-foundry plugin to a Hardhat project. Imported files wont have any definitions or types, suggestions, etc. For example the following screenshot showing import definitions not being found:

The project will build fine though.

Minimal reproduction steps

The following repo contains a project and steps for a minimal reproduction: https://github.com/tmigone/hardhat-foundry-repro

Search terms

foundry, intellisense, vscode