NEW YORK—Leading chipmaker Intel Corp. told investors Monday that the company discovered a design flaw related to its new computer chip, and would need to manufacture a fix to replace the faulty design.
Intel briefly halted trading of its shares (Nasdaq: INTC) on Monday to announce the discovery of the issue, which impacts its new chips code-named Sandy Bridge. In addition, the company halted sales of the chips and has recalled all pending orders.
The new chips, which are much more complex than previous designs, combining graphics engines with core processors for the first time, were launched this month and included in several PC models released by computer makers.
“In some cases, the Serial-ATA (SATA) ports within the chipsets may degrade over time, potentially impacting the performance or functionality of SATA-linked devices such as hard disk drives and DVD-drives,” according to a statement from Intel. “The chipset is utilized in PCs with Intel’s latest Second Generation Intel Core processors, code-named Sandy Bridge.”
The computer chip itself is not affected, Intel said.
The mistake will prove costly for the Santa Clara, Calif.-based company. Intel estimates that a fix would cost the company $700 million in total, $300 million of which would be spent in the first quarter of 2011.
Intel estimates that the error would cost the company 2 percent in gross margin for the first quarter, and 1 percent for full-year 2011.
The company had touted the processor to consumers, with CEO Paul Otellini claiming “a visually stunning computer experience” for the end user, in the company’s first quarter earnings call with analysts.
Shares of Intel were flat on Monday, closing at $21.46. The news boosted rival Advanced Micro Devices, which saw its shares jump 4.5 percent on Monday.
Intel briefly halted trading of its shares (Nasdaq: INTC) on Monday to announce the discovery of the issue, which impacts its new chips code-named Sandy Bridge. In addition, the company halted sales of the chips and has recalled all pending orders.
The new chips, which are much more complex than previous designs, combining graphics engines with core processors for the first time, were launched this month and included in several PC models released by computer makers.
“In some cases, the Serial-ATA (SATA) ports within the chipsets may degrade over time, potentially impacting the performance or functionality of SATA-linked devices such as hard disk drives and DVD-drives,” according to a statement from Intel. “The chipset is utilized in PCs with Intel’s latest Second Generation Intel Core processors, code-named Sandy Bridge.”
The computer chip itself is not affected, Intel said.
The mistake will prove costly for the Santa Clara, Calif.-based company. Intel estimates that a fix would cost the company $700 million in total, $300 million of which would be spent in the first quarter of 2011.
Intel estimates that the error would cost the company 2 percent in gross margin for the first quarter, and 1 percent for full-year 2011.
The company had touted the processor to consumers, with CEO Paul Otellini claiming “a visually stunning computer experience” for the end user, in the company’s first quarter earnings call with analysts.
Shares of Intel were flat on Monday, closing at $21.46. The news boosted rival Advanced Micro Devices, which saw its shares jump 4.5 percent on Monday.
