An Intel recall of the heralded Sandy Bridge chip set was announced by the company on Monday. A design flaw that could affect the long-term performance of the Sandy Bridge processor emerged that wasn’t detected in earlier tests. The Intel Sandy Bridge recall could be a $1 billion mistake for the chip maker and a boon to Intel rival Advanced Micro Devices.
Why Intel recalled Sandy Bridge
The Intel recall comes shortly after the company predicted its new Sandy Bridge processor would become the most successful chip set Intel has ever made. Intel had started Sandy Bridge shipping on Jan. 9. The design flaw doesn’t affect the Sandy Bridge platform directly, but a defect in a companion chip called Cougar Point was detected that requires a redesign. The Cougar Point Serial ATA (SATA) ports have a flaw that could degrade the performance of SATA-linked PC components such as DVD drives and hard drives over time. Intel has halted Sandy Bridge shipping and said it must re-manufacture the Sandy Bridge processors.
Intel recall and computer industry sales
The Intel recall could be a blow to computer industry sales. Intel predicted that Sandy Bridge would help generate $125 billion in revenue for PC makers in 2011. Touted as a key to Intel’s future success, the Sandy Bridge is a combo processor designed to make stand-alone graphics processors no longer necessary, which would greatly reduce PC manufacturing costs. Sandy Bridge has been incorporated into the design of more than 500 PC models. The Intel recall could delay shipment of millions of computers. In a statement, the company said it expects to resume delivering an updated version of the chip set to PC makers in late February and expects to completely replace the supply in April.
Intel’s $1 billion design flaw
The Intel Sandy Bridge recall throws a monkey wrench into the computer industry that could present a golden opportunity to its rival, Advanced Micro Devices. AMD is shipping a rival combo processor called “Fusion.” Re-manufacturing the Sandy Bridge chip set will cost Intel $700 million. The company said it will also lose about $300 million in revenue. The recall has forced Intel to adjust the gross margin on its first quarter revenue projection to 61 percent from 64 percent. Intel stock was down 1.12 percent Monday afternoon, while AMD stock was up 4.14 percent.
PC Magazine: http://www.pcmag.com/article2/0,2817,2378975,00.asp
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