Intel has reported a design flaw in its recently released chipset used in the company’s Sandy Bridge microprocessors and it will cost about $700 million to the company to fix the issue.
The company is working with laptop makers to replace affected computers. Intel has stopped the shipment of the affected support chip and the design issue has been fixed, claims Intel.
The flawed chipset was used in PCs with the next-generation Intel Core processors based on the Sandy Bridge architecture, which were introduced last month at the Consumer Electronics Show 2011.
So, what’s the actual flaw? The flaw is that the chipset may degrade with use over a period of months or years, slowing down the transfer of data to and from the computer’s hard drives and DVD drives.
Who will be affected from the flawed chip, you ask? Intel says that customers who have purchased computers with second-generation Core i5 and Core i7 quad-core microprocessors could be affected by the chipset issue.
Intel discovered a design issue in the 6-Series chipset, which is code-named Cougar Point and is used in systems with Sandy Bridge processors. The fault will upset production on more than 500 computer models that were to have used the processors. This will adversely hit the PC industry.
Intel has shipped 8 million of the defective chips, but fortunately PCs with those chips have only been on sale since Jan. 9, which means relatively few of PCs have reached to consumers. The main processing chips in these computers are branded Core i5 and Core i7. However, Intel says consumers can continue to use their systems with confidence, while working with their computer manufacturer for a permanent solution.
The company also says that it has already started making a new version of the support chip, and will hopefully start shipping it to the PC makers by end of February. Until then, the production of computers using Intel’s Sandy Bridge chips will be on hold.
The delay will reduce Intel’s revenue by about $300 million in the first quarter. The company has put an estimate of the repair and replacement cost at $700 million. After this news broke out, Intel shares slid 25 cents to $21.21 in early afternoon trading.
Intel expects revenue of $11.7 billion in the first quarter, +/- $400 million. Its prior expected revenue was for $11.5 billion, +/- $400 million. The company also expects revenue to grow by a mid- to high- teens percentage in 2011. It previously expected a growth of about 10 percent.
Wondering how has Intel raised its overall revenue outlook for the first quarter despite the setback? This is because of the recent acquisition between Intel and phone-chip maker Infineon Technologies. Also, Intel expects to complete the acquisition of McAfee by the end of the first quarter. So, it expects some revenue to come from these acquisitions too.
However, the company said that its gross margin will be lower than its previous outlook, due to the loss to be incurred related to the chip flaw. Intel now expects its first-quarter gross margin to be 61 percent as compared to its earlier outlook of 64 percent. For the entire year, it expects a gross margin to reach 63 percent, compared to the previous expectation of 65 percent.
There are a line of events that might get affected due to the flaw found in Intel chip supporting Sandy Bridge. Questions like would new Apple MacBooks get delayed? Will new Sandy Bridge laptops get delayed too?
The chip flaw was identified by Intel after it got a better understanding of circuit-level issues related to temperature, voltage and time degradation. The company is continuing to ship Sandy Bridge processors, while the 6-Series chipset has been put on hold. But the chipset and Sandy Bridge processors are paired in many PCs, so the chipset halt could indirectly affect Sandy Bridge volumes.
Well, Sandy Bridge issues mean new MacBook Pros might come late. We do not know when exactly the new MacBook Pros are hitting the markets but there are speculations that they are due soon. The new Apple MacBook Pros will feature the new Sandy Bridge processors, including the older Core 2 Duo-toting 13-inch MacBook Pro. We were expecting new Sandy Bridge laptops to arrive somewhere around the end of February, but they may get delayed too.
This is a big hit for Intel, which is known for flawless chip designs. The company had high hopes from its Sandy Bridge chips to deliver close to a third of the revenue during fiscal 2011.
Recently, every other large and small desktop vendor has announced Sandy Bridge-equipped PCs. And now, with the chip flaw been detected, vendors as well as customers who own Sandy Bridge machines must be thinking whether the system needs to be sent back and who will pay for parts, labor, shipping costs, etc.
Cnet spoke to a few vendors. Acer’s spokeperson said, “We will be collaborating with Intel to rework any systems with the affected parts, and we expect to have an update by end of day tomorrow about any potential impact to consumers and the associated recall plan, should one be required. Because we are still early in the launch cycle for our Sandy Bridge product line, we expect the impact to Acer’s business and our customers to be minimal.” Related: Acer Sandy Bridge tablets
Asus said that everyone is affected by this development, especially them, as they are the top manufacturer of motherboards besides notebook and AIO business. Read more about Asus’ Sandy Bridge motherboards
Asus also said that certain notebooks will be affected and that they will have those details tomorrow.
Lenovo said that possible Lenovo models affected may include the latest generation of IdeaPad laptops. Of these, the company have shipped approximately 10,000 units with the affected Intel chip worldwide. Lenovo is working with Intel on the technical details. In the meantime, Lenovo wants to reassure their customers that they stand behind its products. If any Lenovo products are affected by this issue, the company gives assurance that they will work with their customers to find an appropriate remedy.
To know how Intel will respond to customers who have purchased Intel-made motherboards at retail with the affected chipsets, you can visit the link issued by the company below: