Intel announces $1 billion setback from chip flaw

by Ian King, Alex Sherman, Bloomberg News

Intel Corp, the world’s largest maker of semiconductors, said a design error in one of its chips will cost it $1 billion in missed sales and expenses.

The error will cut first-quarter revenue by $300 million and gross profit margin by 2 percentage points, Intel said in a statement Monday. The company will spend $700 million to replace potentially faulty chips and systems.

The design fault is in a support chip, or chipset, for Intel’s latest processor model, called Sandy Bridge, introduced this month as part of a bid to improve PC graphics and ward off a challenge by AMD. Santa Clara’s Intel said it has corrected the flaw and begun manufacturing a new version of the chip that will resolve the issue.  …..

Chipsets support processors, the main semiconductor component in personal computers, by linking them with other parts of the machine and performing secondary functions. A chip can take months to go through the manufacturing process. Intel said it expects to begin delivering the updated version of the chipset to customers in late February. The company has shipped about 8 million of the Cougar Point chips that will have to be replaced.  Report

DCL: Finding new methods of analyzing the outputs of chip design simulators was the first test bed for early CEP research. This is not the first time these errors have happened in chip development, and when they get as far as production they are very costly!