An Intel recall of the heralded Sandy Bridge chip set was announced by the company on Monday. The decreasing effectiveness of the Sandy Bridge processor over time could be the result of a flaw that slipped through previous tests undetected. Intel’s recall of Sandy Bridge is expected to cost the company about $1 billion and create opportunities for Advanced Micro Devices, one of Intel’s chief rivals.
Intel’s decision for Sandy Bridge to be recalled
Right after Intel predicted the Sandy Bridge processor would be the best Intel had ever made, a recall was issued. Shipping started for the Sandy Bridge chips on Jan. 9. The Sandy Bridge platform isn’t where the defect is; it is in a companion chip called Cougar Point, and it has made a redesign necessary. The Cougar Point Serial ATA (SATA) ports have a flaw that could degrade the performance of SATA-linked PC components such as DVD drives and hard drives over time. Intel has halted Sandy Bridge shipping and said it must re-manufacture the Sandy Bridge processors.
How the Intel recall may affect sales in the computer industry
Computer industry sales might decline based on the Intel recall. Intel predicted that Sandy Bridge would help generate $125 billion in revenue for PC makers in 2011. Intel suggested that the Sandy Bridge was the key to its success because it would drop PC manufacturing costs a lot. It is a combination processor, meaning a separate graphics processor isn’t needed. Sandy Bridge has been incorporated into the design of more than 500 PC models. The recall for Intel will slow millions of computer shipments. They will be delayed considerably. In a statement, the company said it expects to resume delivering an updated version of the chip set to PC makers in late February and expects to completely replace the supply in April.
Intel to pay $1 billion for flaw
The Sandy Bridge recall could really hurt Intel’s business and could provide a great opportunity for rival Advanced Micro Devices. AMD ships a rival combo processor known as “Fusion.” Re-manufacturing the Sandy Bridge chip set will cost Intel $700 million. The company said it will also lose about $300 million in revenue. The margin on first quarter revenue has changed to 61 percent from 64 percent because of the Intel recall. AMD stock went up 4.14 percent Monday while Intel stock went down 1.12 percent.