Intel finds chipset error

Santa Clara, Calif. — Intel Corp. has discovered a design issue in a recently released support chip, the Intel 6 Series, which could cause, in some cases, the Serial-ATA (SATA) ports within the chipsets to degrade over time. This could potentially impact the performance or functionality of SATA-linked devices such as hard disk drives and DVD-drives, said Intel.

The support chipset, code-named Cougar Point, is used in PCs with Intel’s latest Second Generation Intel Core processors, code-named Sandy Bridge. Intel said it has implemented a silicon fix.

Intel has stopped shipping the Intel 6 Series support chip from its factories, and has begun manufacturing a new version that will fix the issue. Intel said the Sandy Bridge microprocessor is not impacted by this issue.

The company expects to begin delivering the updated version of the chipset to customers in late February and expects full volume recovery in April.

For computer makers and other Intel customers that have purchased potentially impacted chipsets or systems, Intel will work with its OEM partners to accept the return of those chipsets, and plans to support modifications or replacements needed on motherboards or systems.

The systems with these support chips started shipping on January 9th and the company believes that relatively few consumers are impacted by this issue. The only systems sold to an end customer potentially impacted are Second Generation Core i5 and Core i7 quad core based systems.

As a result of the design error, Intel expects reduced revenues by approximately $300 million in the first quarter of 2011 as the company discontinues production of the current version of the chipset and begins manufacturing the new version. Total cost to repair and replace impacted materials and systems in the market is estimated to be $700 million.

Since this issue impacted some of the chipset units shipped and produced in the fourth quarter of 2010, the company will take a charge against cost of goods sold, which is expected to reduce the fourth quarter gross margin percentage by approximately 4 percentage points from the previously reported 67.5 percent, according to Intel.

Intel also said it will take a charge in the first quarter of 2011, which will lower the previously released gross margin percentage by 2 percentage points and the full-year gross margin percentage by one percentage point.