Intel Finds Chip-Design Flaw

Intel Corp. said it discovered a design issue in a recently released support chip for its latest processors, prompting the company to halt some shipments and warn of a revenue shortfall.

The company pegged the cost to repair and replace the affected materials and systems in the market at about $700 million. It expects the design issue to cut its first-quarter revenue by about $300 million, though it isn't expected to hurt full-year revenue.
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The company said it has stopped shipments of the affected Intel 6 Series chip from its factories. has corrected the design issue and has started making a new version of the chip that will resolve the issue. Intel said it expects a "full volume recovery" in April.

The company said in some cases, the serial-ATA ports within those chipsets may degrade over time, potentially affecting the performance or functionality of other devices such as hard drives and DVD drives. The chipset is used in the company's latest Sandy Bridge processors used in PCs.

Intel gave an updated revenue outlook that factors in the chipset issue and the acquisitions of Infineon Technologies AG's wireless business and McAfee Inc., saying it now expects first-quarter revenue to range from $11.3 billion to $12.1 billion, compared with its prior view of $11.1 billion to $11.9 billion. The Infineon deal closed Monday, and Intel said Monday it expects the McAfee deal to close by the end of the first quarter.

The company also said it expects first-quarter gross margin to be 61%, plus or minus a couple of percentage points, compared with its previous forecast of 64%, plus or minus a couple of percentage points.

For the full year, Intel projects revenue growth in the mid- to high teens, compared with its previous expectation of 10%.

Intel has been busy on the acquisition front of late, announcing in August that it would buy McAfee for $7.68 billion. It bought the Infineon unit for $1.4 billion.

The company has posted record revenue and profits in recent quarters, helped by a surge in demand for tech products following a pullback in spending during the recession. Its exposure to the enterprise market has buffered it of late from relatively weak consumer demand for PCs.

Read more: http://online.wsj.com/article/SB1000142405...l#ixzz1CdBLGcTk

From: New York Times

This post has been edited by andyz: Feb 1 2011, 12:27 AM