Intel Admits Costly Chip-Design Error

Published by: Frank Galvano on 31st Jan 2011 | View all blogs by Frank Galvano
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Intel Admits Costly Chip-Design Error

Intel Corp., the world's largest chipmaker, disclosed a design error made in a component of its latest chip design that will cost the company about $300 million in revenue.  The error involves a support chip used in the recently released 2nd generation of the company's Core processor.

The news sent Intel stock down .61 percent, while boosting rival AMD's stock, which climbed more than 4.4 percent with about 15 minutes left in Monday's trading session.  Despite the costly chip-design error, Intel has increased its first-quarter sales forecast, in part because of its recent acquisition of Infineon Technologies' wireless business, which it hopes will offset at least a portion of the costs of the chip error.

Intel is now reporting expectations for first-quarter sales to be in a range of $11.3 billion to $12.1 billion.  However, the company also said that it estimates the total cost of the chip-design error at about $700 million, including costs associated with repairing and replacing materials and systems already shipped.

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