As reported by EE Times earlier this week, Xilinx issued a recall for Spartan-3, 3E and 3L devices made between early September 2005 and late April of this year. The recall was issued after one Xilinx customer reported a packaging-related technical problem on a small percentage of the chips.

In a research note published Friday (June 30), Chillara said the recall could pose "a major risk as customers who have already used these chips in high-end consumer applications might be very concerned with the quality issue."

According to the research note, American Technology believes that the recall does not affect devices that are already consumed by customers. Spartan-3s are being used in applications such as plasma TVs and digital TVs, according to American Technology Research.

Chillara said American Technology Research believes it has identified the mold compound issue that prompted the recall, and that it could take time to fix, "thereby causing volatility in next quarter's numbers.

Chillara said American Technology Research believes the Spartan-3 recall poses a material risk to Xilinx' stock, but the firm maintained its "buy" rating and price target of $25. Xilinx traded at $22.65 in early afternoon Nasdaq trading Friday.