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Intel selling faulty chip again, citing demand

Mon, 02/07/2011 - 1:06pm
JORDAN ROBERTSON - AP Technology Writer - Associated Press

Intel Corp. has resumed shipments of a chip with a known flaw. But in order to get it, computer makers must promise not to use it in designs that trigger the serious performance problem.

Intel stopped production of the faulty "chipset" last month, after discovering that it would cause some computers to gradually lose their ability to talk to their hard disk and DVD drives. Cleanup was expected to cost $1 billion.

The admission was both an embarrassment for the world's biggest computer chip maker, as well as a sign that Intel learned its lesson from its famously botched handling of another chip flaw issue nearly 20 years ago.

Intel said Monday that its customers demanded that the latest faulty chip go back on sale while Intel hustles out a fixed version, which is expected to ship this month.

Computers can be designed in a way that avoids the problem. Two big computer makers, Hewlett-Packard Co. and Dell Inc., have said some of their machines have the faulty chip. They have offered refunds.

Intel said the latest decision wouldn't change the company's financial guidance.

The about-face is noteworthy because in the mid-1990s Intel was pilloried for its insistence on selling a chip the company knew was flawed.

At the time, Intel played down the severity of the problem, which consisted of a calculating error in the Pentium processor. But Intel eventually caved to public pressure and replaced the chips at a heavy cost. The incident became one of Silicon Valley's most famous blunders.

This time, Intel said it immediately halted production of its Intel 6 series chipset after it discovered a design error that caused a gradual erosion of the communication channels between a computer's main processor and its hard disk and DVD drives.

The flaw only appeared in computers that utilized the chip's communication "ports" in certain ways.

The company, based in Santa Clara, California, said after the market closed Monday that "only computer makers who have committed to shipping the Intel 6 Series chipset in PC system configurations that are not impacted by the design issue will be receiving these shipments."

Intel shares lost 1 cent to $21.68 in extended trading. They had gained a penny to finish the regular session at $21.69.

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