Intel (INTC) Cuts Guidance After Flaw Found with New Processors

January 31, 2011 10:10 AM EST
Intel Corp. (NASDAQ: INTC) cut its full-year outlook on Monday due to an identified chipset design error with its forthcoming Sandy Bridge line of second-generation Core processors.

The world's largest manufacturer of microprocessors said the Serial-ATA ports in the chipsets may degrade over time. The company said that it has identified and corrected the issue, and has begun manufacturing a new version of the support chip.

Intel said that it expects to begin delivery of the updated version of the chipset in late February, with full volume recovery in April.

The company said that its sees a total cost of $700 million, forcing it to cut its forecast for sales in the first quarter by $300 million to $11.7 billion +/- $400 million, compared tot eh Street's view of $11.46 billion.

Intel also sees the issue cutting its first quarter gross margin about 2 percent compared to its prior view, adding that full year sales will not be impacted.

"The company expects to begin delivering the updated version of the chipset to customers in late February and expects full volume recovery in April. Intel stands behind its products and is committed to product quality. For computer makers and other Intel customers that have bought potentially affected chipsets or systems, Intel will work with its OEM partners to accept the return of the affected chipsets, and plans to support modifications or replacements needed on motherboards or systems," Intel said in a statement.

Shares of Intel are halted in early market movement on Monday, with trading set to resume at 10:20am.

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