Newegg Axes Supplier Over Fake Intel Chips

Newegg has fired a supplier of Intel processors after the tech retailer discovered it had received fake Core i7 chips that were later sold to customers.

A Newegg spokesman on Tuesday identified the supplier as IPEX Infotech Inc. In a statement sent earlier to InformationWeek, the retailer said IPEX had acknowledged shipping "demo units" to Newegg by mistake.

"We have since come to discover the CPUs were counterfeit and are terminating our relationship with this supplier," Newegg said.

IPEX was unavailable for comment in time for this writing.

Newegg said it had sent a number of replacement units for the bogus Core i7-920 CPUs it sold and was doing "everything in our power to resolve the matter promptly and with the least amount of inconvenience to our customers."

"We take matters like this extremely seriously, and are working in close cooperation with Intel and the appropriate law enforcement authorities to thoroughly investigate this incident," the online tech retailer said.

Tech site HardOCP was the first to report that Newegg had sold counterfeit processors. Intel on Monday confirmed that the chips were fake, and said the retailer was moving quickly to replace them.

On Tuesday, Intel declined comment on the latest development. "You'll have to talk to Newegg about the suppliers they work with," a spokesman said in an e-mail.

Counterfeiting is a major problem in the high-tech industry. Software counterfeiting, for example, has become rampart, particularly in key growth markets like Asia-Pacific. The Business Software Alliance estimates that software vendors alone lost more than $50 billion globally in 2008 due to counterfeiting and piracy.