SANTA CLARA, Calif. -- The recall of motherboards a flawed memory-translator-hub (MTH) component will cost Intel Corp. a penny off its first-quarter earnings, the chip giant announced here today.
Intel adjusted its revenue down from $8.02 billion to $7.99 billion in the quarter. Net income was lowered as well, from $2.73 billion including gains and charges, to $2.70 billion.
End users who purchased Intel's CC820 or "Cape Cod" motherboard are being asked to return it to the company from which they purchased it, and they will receive a new MTH-less VC820 or "Vancouver" board in return. Purchasers of third-party boards that used the MTH will receive either a cash refund, a credit, or a replacement board.
A spokesman for Intel said that the company was also working with individual OEMs, resellers and motherboard vendors "to find a solution."
Little more than a week ago, Intel suddenly recalled all of the motherboards using the MTH component, an optional addition to the Intel 820 chip set to allow it to access SDRAM (see May 10 story).Potential errors included the possibility of data corruption. Less than a million boards were affected, Intel said, but instead of being concentrated within any one supplier or OEM, the boards are also scattered across myriad motherboard makers and "white-box" resellers and assemblers that serve smaller businesses.
Each of the new VC820 boards will contain up to 128 megabytes of Direct RDRAM, at PC700 speeds or faster. Industry sources told EBN that Intel has purchased up to a million pieces of PC700 Direct RDRAM, although the Intel spokesman declined to comment on how many chips Intel has stockpiled.
In its filing for the quarterly earnings adjustment, Intel said, "The company also recorded additional inventory reserves related to such [motherboard] products that may be returned and the company's inventory of these products as of the end of the first quarter. The costs associated with the motherboard replacement program cannot be estimated because the number of motherboards that will be replaced (the user replacement rate) and the actual cost to replace are dependent on several variables that cannot be estimated at this time. The company expects to record a liability for these costs in a future period when the replacement rate and the cost to replace are known or can be estimated, and this liability could have a material adverse impact on the results of operations of the period in which it is recorded."
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