I don't believe the fact that this was not the main microprocessor is the reason behind this problem. Who wants $700 million as the cost of not paying enough attention? As others have said here, this was a problem that was not that unusual but the cost is obviously enormous and it's difficult for Intel to defend this especially since OEM customers were negatively impacted.
The McAfee acquisition enables Intel to take security to another level in its operations. This is another addition to the company's offering and I think it offers Intel the opportunity to integrate software security into its products. I am equally looking forward to how it plans to do this and the effect on customers.
I noticed that the press release refers to the product having the issue as a "support chip". Does the fact that this is not their flagship microprocessor mean there has been cutting of corners in the design process? True, this year's cost hit is only 4% of the year's profits, but it adds up to a large percentage of the $3.6 billion in R&D and MG&A spending.
I'm curious about Intel's purchase of McAfee, the makers of security software. How would that fit in with their long-term growth strategy?
Intel has been the leader in the chip industry for as long as I can remember and continues to spend billions on R&D to continue its leadership position.Things like this will continue to happen, especially as the technology expands exponentially.As Moore’s Law(based on Intel’s co-founder Gordon Moore) states that the number of transistors on a chip will double every two years.And this law has pretty much geld true for over 40 years.At some point in the near future (5-10 years) Moore’s Law will evolve and the industry will have to move beyond the conventional CMOS chip technology, like muti-dimensional and nanotechnology chip technology and who knows what else.
For sure Intel will be at the forefront on these new innovations and with 100% certainty there will continue to be flaws that are found and fixed.
Bolaji, see how a small or minor negligence in design and testing part cost Intel, a loss of nearly $700 Million. This loss showing an insight about, how much one should careful, about designing and verification process, before anything going to the production mode. Luckily Intel had traced the fault before shipping and saved their face in the competitive market. Otherwise recalling the damaged chips and replacement may cause more burdens for them. Intel is a multi billionaire company and they are capable for afford loses up to a certain extend. Moreover, if once some black or bad mark comes for a brand, it affects the future marketing and share value too.
Tony, Again, thanks for shedding more light on what is obviously a difficult subject. Could you address some of these technological and supply chain challenges in your next blog? I believe this is the one area where EBN readers can benefit from your experience and also suggestions on how to deal with situations like this in their manufacturing operation.
Chip design is very complicated, In a previous lifetime I was an applications engineer working on PC chipsets. Over twenty years ago and even today I doubt there is a perfect chip set. All chip sets have an erratta list. If an erratta is a show stopper, you fix it before going to production. Otherwise there are work arounds so you can go to production. These could involve board layout or SW fixes.
Some problems do not crop up until you go into volume production and customers put the product through its paces. Remember that when you look at a datasheet there are min-max specs. These are due to variances in manufacturing. The goal is to stay within these specs. I have seen where prototypes work fine in a test system. Then you start getting wider spreads in full production and problems crop up.
Find problems and fixing them is a never ending job in this business. The main point is how will a company handle these problems. In this case, as soon as Intel heard about a problem, regardless of how small it may have seemed at the time, they took nothing for granted and dove into it. Better to catch it early than after you have been in volume production for a year or more.
$700m is huge but again its nothing compared to brand Intel. As Tony pointed out in his previous comments Intel has suffered a lot in infamous Pentium FPU bug. I guess Intel has learnt lesson from this FPU bug and hence didnt want to take risk this time around, thought the bug seems to small.
Tony, Thank you for the historical perspective. As you noted, Intel has become more aggressive in recent years and months with actions to burnish its reputation and fix problems either in its relationship with regulators or with companies like AMD and Nvidia.
I wonder though if you can clarify why the design flaw was only identified after production and not before. I imagine various tests were done over months. How did such a problem evade diagnosis and what do you think the company has in plan to avoid a future occurrence? Good to hear from you as usual.
Intel is refunding some of the OEMs, such as Samsung which is recalling some notebook models running on this Intel processor. This is a huge and costly mistake.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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