Intel Faces Billion-Dollar Chip Recall

Intel Faces Billion-Dollar Chip Recall

Intel Faces Billion-Dollar Chip Recall

Design fault in Cougar Point chip prompts costly Sandy Bridge processor recall.

Chip manufacturer Intel has admitted that recalling and replacing its faulty Sandy Bridge processor could end up costing it a billion dollars.

The firm has identified a design fault in a Sandy Bridge support chip, Cougar Point, which could result in its SATA ports degrading over time, negatively affecting performance or functionality of connected SATA devices such as hard drives.

In a statement on its website Intel said it had stopped production of the chip, corrected the fault and begun manufacturing a functional replacement. It will now begin work on replacing the chips in systems that have already been sold.

While Intel claims that relatively few end users have been affected because systems containing the Sandy Bridge processor have only been on sale since January 9, it has nonetheless lowered its projected first quarter earnings by $300 million, and estimates that repairing and replacing affected systems will cost a further $700 million.

While the figures sound huge, they are rather put into context by Intel confirming it had revised its projected gross margins for the fiscal year, lowering them by just one per cent.

Intel says end users who are affected – owners of Second Generation Core i5 and Core i7 quad core systems – can “continue to use their systems with confidence”, and should contact Intel via its support page, or their system’s manufacturer.

The Guardian reports that Intel’s stock fell by 1.5 per cent on the New York Stock Exchange yesterday, with rival AMD’s rising by 5 per cent.