Cougar Point chip motherboard recalls could cost Intel over $1 billion

Intel, one of the major worldwide suppliers of chipsets used in laptop and desktop computer motherboards, is currently in the midst of a massive recall effort of its 6 Series Chipset, code-named Cougar Point, that could end up costing the corporation upwards of $1 billion.

Cougar Point chip motherboard recalls could cost Intel over  billion

After just a few short weeks of availability to consumers, Intel publicly acknowledged at the end of January that there was a “design issue” present in the Series 6 chipsets and that was causing them to halt production, and that they would begin delivering replacements with a “silicon fix” to partners and computer manufacturers in late February. Several computer manufactures including HP, Dell, and ASUS quickly scrambled to notify customers of the issues and implement a strategy to deal with returns and exchanges.

So what exactly is this issue that’s causing such an upheaval for Intel and its partners?

According to Intel’s senior communications manager David Salvator, the issue is actually a case of “an exceptionally thin gate oxide” present in the transistor for second-generation SATA ports 2-5. The ports work well in a low-voltage situation, but when power is amped up there is leaking current present. This causes a degradation in SATA performance over time, and eventually complete failure of the affected SATA ports. Third-generation ports 0 and 1 are unaffected.

Intel reacted to the issues quickly and issued a Product Change Notification to motherboard manufacturers last week that indicated that new product would be available to them by February 14th.

A report out of Taipei on Monday indicates that Intel has also agreed to pay its affected partner firms the full cost of incurred production and shipping costs related to the 6 Series Chipset issues. It also stated that the repaired version of the chipsets began mass production on February 14th, and would begin to ship in small quantities by the end of the month. A regular supply of the chipset, however, would not be available again until sometime in April.

Industry analysts are downplaying the effect that the recall will have on consumers.

“Obviously there are some issues for the industry as machines that are sitting in the channel; in factories, in containers on ships, in warehouses and in trucks, all need to be located, identified and recalled. That shouldn’t impact customers too much,” said Steve Kleynhans, vice president of Gartner. “These users tend to be quick to adopt new products and push them to their limits. Many also tend to buy motherboards and build their own systems, however they form a relatively small percentage of the market.”

When facing a $700 million price tag for costs to repair or replace affected parts, along with an estimated $300 million Q1 revenue reduction related to the issues, however, Intel executives are likely having a hard time seeing a bright side to the situation.

Consumers who have bought a motherboard or computer since January 6th, and believe they have the affected Series 6 Chipset, should consult the manufacturer for advice about the recall.

It’s never a good situation when a company realizes it has been shipping flawed products, but props to Intel for quickly dealing with the situation to minimize the impact and take care of affected manufacturers. Too often nowadays it seems like companies like to cover up and deny issues. It’s refreshing to see one admit a major problem and deal with it head-on.