February 7, 2011 / 9:56 PM / 7 years ago

Intel to ship flawed chipsets in some cases

SAN FRANCISCO (Reuters) - Intel Corp resumed shipments of a flawed chipset for use with its new cutting-edge processors, responding to demands from PC makers who will use the chips selectively.

Intel had announced last week that it had discovered a flaw in a chipset used with its new Sandy Bridge processors, a major product launch for the company this year, and stopped shipments of them.

Intel also said on Monday it expects to begin shipping a new version of the so-called Cougar Point chipset in mid-February. It had previously said shipments of the corrected chips would resume in late February.

About 5 percent of PCs using the new chipsets could have failed over a three-year period, had the problem affecting communication ports with hard drives and DVD drives gone undiscovered.

“Under certain configurations, known configurations that work, they’ll begin shipping again. We’ll release the parts under those conditions,” Intel spokesman Chuck Mulloy told Reuters.

Many laptops for example, only use a small number of possible ports, not all of which are affected by the flaw.

“It looks a bit shocking, but it probably looks worse than it is,” said Wedbush analyst Patrick Wang. “As long as those machines are configured to use the (flawless) ports they should see no difference in usage.”

Shares of Intel were barely changed, up 6 cents at $21.75 in after-hours trading.

For Intel, the world’s largest chipmaker, the design flaw has been another distraction at a time when it faces sluggish personal computer sales and a major challenge from the exploding popularity of mobile devices, a market dominated by Britain’s ARM Holdings.

It said the resumption of shipments would not affect first-quarter and 2011 guidance given by the company last week when the flaw was announced.

Intel cut its first-quarter revenue forecast by $300 million and expects the total cost to repair and replace the chip to be about $700 million. Full-year revenue is seen unaffected.

Reporting by Noel Randewich; Editing by Bernard Orr

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