Intel's decision to suspend chipset shipments for its second-generation Core processor is likely to delay shipments of PCs using the new chips at least until March, with computer makers in the meantime deciding whether to take back systems already sold with the flawed hardware.
Computer makers are not expected to resume selling PCs with the new processors, codenamed Sandy Bridge, until the first week of March, at the earliest. That's because Intel says corrected versions of the 6 Series chipset, codenamed Cougar Point, won't start shipping until late February. "April is the worst case scenario," Leslie Fiering, analyst for Gartner, told InformationWeek.
Intel says "full volume recovery" of chipset shipments won't occur until April, which is interpreted as the chip maker needing about a month to start shipping enough chips to meet full demand. Large computer makers will likely be the first to get the motherboards with the new chipsets, Shane Rau, analyst for IDC says. "The computer makers that will be affected the most will be the smaller OEMs (original equipment manufacturers) who can't get the chipsets as soon as they are released."
Intel surprised the industry Monday by announcing that a design flaw could cause the serial-ATA (SATA) ports within the chipset to degrade over time, which would affect the performance of a PC's hard disk drive and DVD drive. If a problem occurs, it will likely happen over three years, presenting computer makers with the decision whether to recall systems already sold or to replace the motherboard on an as needed basis.
Intel has sent an email to system manufacturers recommending that they stop building and shipping Sandy Bridge-based systems until the new chipsets are available. Intel did not have a recommendation on whether PCs and motherboards sold should be recalled. The email was posted on the hardware review and information site PC Perspective.
One computer maker undecided over what to do next is Dell, which said it was talking to Intel about the design flaw. Products affected by Intel's snafu included the XPS 8300, the Vostro 460, the Alienware M17x R.3, and the Alienware Aurora R.3. Those products were not available on Dell's site Tuesday.
"We're committed to addressing this with customers who have already purchased one of the four products and will provide further details on this as it becomes available," Dell said in a statement sent to InformationWeek.
RJM Computers, a small manufacturer in Boise, Idaho, also suspended sales of Sandy Bridge systems, saying it was taking the step before selling any PCs with the flawed chipset. The company planned to delay production until "a verified fix is in full production," the company said on its blog.
Computer makers are expected to take a conservative approach to the problem and suspend sales of Sandy Bridge systems. "The issue for the OEMs is a potential recall, and it's cheaper to delay than it is to go through a recall," Fiering said.
Retailers and computer makers didn't start offering the first systems until early January, so the majority of the tainted chipsets are still in the factories of system and motherboard makers. "Those are easy to pullback, because they haven't been sold to the end user," Rau says.
The current fiasco is considered less damaging than the problem Intel faced when a flaw discovered in its Pentium processor in 1994 led to the company being severely criticized for playing down the problem. Intel later offered to replace the flawed chips and announced in early 1995 a pre-tax charge of $475 million against earnings as a result of the snafu.
The latest problem is expected to reduce the company's revenue by $300 million in the current quarter, with the overall cost to repair and replace the flawed products pegged at $700 million. In addition, Intel will have to deal with fixing the damage to its reputation. Advanced Micro Devices and other rivals are expected to use the snafu in sales calls.
"Something like this always creates a PR challenge, and AMD would have to be asleep at the switch not to pick up on it and leverage it," Fiering says.