Intel issues recall for all Sandy Bridge chipsets

Expects to take a profit hit on the back of it

INTEL HAS ISSUED a product recall today of all its Sandy Bridge chipsets, which is a huge deal for the company as the product recall is set to have a fairly significant if not huge impact on Intel’s profits this quarter. However, as the Chinese New Year is already in full swing in most of Asia, it’s unlikely that we’ll see any product recalls from Intel’s partners for at least another couple of weeks.

What is worrying is how unclear Intel has been in their official statement as to what has gone wrong. However, what is very clear is that this is a silicon level issue as Intel has already stopped the manufacturing of its current revision of its Cougar Point chipsets and will have a new revision ready in late February, although volume shipments aren’t expected to be in full swing until April. This in itself will lead to motherboard shortages in the market and we might see some unscrupulous retailers take advantage of this and charge consumers more for the products.

The problem is related to the SATA controller and Intel simply states “In some cases, the Serial-ATA (SATA) ports within the chipsets may degrade over time, potentially impacting the performance or functionality of SATA-linked devices such as hard disk drives and DVD-drives.” That’s about as clear as mud, although we’re hoping for a more detailed explanation from Intel later today. We’re not sure how a SATA port can be “degraded” as Intel puts it, as this is a term that is usually used in relation to flash memory and not parts of a chipset.

Currently it looks as if Intel has left their partners out in the cold.  The timing being during Chinese New Year delays any response they can give S|A much less the end users.  As for the Taiwanese motherboard and notebook makers and to some degree their Chinese factories, this is going to be a huge problem, despite the current shipped board volume isn’t huge as yet. Every single product is going to have to be re-worked and have the chipset replaced, a procedure that is far from cheap. This includes shipment from the end users to the local warehouse in best case, or in worst case a regional warehouse, shipment back to the factories, the re-work procedure and shipment back to the end users. Not only will this be costly, but also time consuming.

Intel seems to have accepted its role in all of this and has stated that it will be working with its partners to solve the problem as quickly as possible. Even so, the company is expecting to take a $300 million revenue hit just by stopping the production of the current chipsets and moving to a new revision. On top of that Intel expects the total cost of the repair and replacement of motherboards to cost them an estimated $700 million. Not a good start to the new year for Intel, but at least they responded quickly to what appears to be a fairly serious issue, which goes some way towards making up for things.S|A

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