Dell Offers Assistance for Faulty Intel Chips

Dell is offering customers who purchased PCs with faulty Intel Cougar Point chipsets options for replacement.

Dell is reaching out to customers who purchased the company's PCs that were affected by faulty Intel chipsets. The computer maker plans to offer all customers who received a system prior to March 1 that was potentially affected by the chipset issue an option for a new replacement motherboard.

Potentially affected systems include Dell's XPS 8300, Vostro 460, Alienware Aurora desktops or Alienware M17x R3 laptops.

In a blog post on the company's Website, the founder of Dell's corporate blog Lionel Menchaca said their teams would begin contacting customers with affected motherboards this week to offer them a new replacement motherboard that corrects the Cougar Point chipset issue. The replacement motherboard and the associated service (service options may vary by region) will be provided to affected customers at no charge. "Bottom line, we will start contacting affected customers this week and will work through these motherboard replacements over the next several weeks," he wrote.

According to Intel, Serial ATA ports within the chipsets may degrade over time. This means they may never degrade, or if they do, it may take a few months for them to do so. If the issue does occur, it affects the functionality of SATA-linked devices, such as hard disk drives and DVD drives. The issue can prevent access to SATA devices inside the system or attached externally. These devices include hard drives and DVD/Blu-ray optical drives. The Cougar Point chipset is embedded on the system motherboards that provide support for 2nd Generation Core Sandy Bridge processors.

In January, Intel announced it discovered a design issue in a recently released support chip, the Intel 6 Series, code-named Cougar Point, and had implemented a silicon fix. For the first quarter of 2011, Intel expects this issue to reduce its revenue by approximately $300 million as the company discontinues production of the current version of the chipset and begins manufacturing the new version. The chip maker does not expect the issue to materially affect its full-year revenue.

The total cost to repair and replace affected materials and systems in the market is estimated to be $700 million. Since this issue affected some of the chipset units shipped and produced in the fourth quarter of 2010, the company said it would take a charge against cost of goods sold, which is expected to reduce the fourth- quarter gross margin by approximately 4 percentage points from the previously reported 67.5 percent. The company will also take a charge in the first quarter of 2011which will lower the previously communicated gross margin by 2 percentage points and the full-year gross margin by 1 percentage point.

Intel rolled out the Sandy Bridge chips during the Consumer Electronics Show in January; they combine Intel 3D HD graphics capabilities with microprocessors on one 32-nanometer device. Company CEO Paul Otellini predicted the Sandy Bridge platform-which Intel calls the 2nd Generation Core processors-will account for one-third of Intel's 2011 revenue and will generate more than $125 billion in revenue for the PC sector.