NEW YORK (CNNfn) - Just hours after its chief rival Advanced Micro Devices said it began shipping its fastest microprocessors, a technical glitch prompted Intel to cease shipments of its competing product and recall those that had already made their way to market.|
Intel (INTC: Research, Estimates) confirmed Monday afternoon that it had stopped shipping its Pentium III microprocessors operating at 1.13 gigahertz, citing problems encountered when running some software applications.
"We've seen that when certain software is running at certain voltages and certain temperatures, there can be an issue with the software not working properly," Michael Sullivan, an Intel spokesman, told CNNfn.com.
Specifically, two applications -- one that is used to perform benchmark tests on computer systems and the other that is used to compile the Linux operating system -- cause a circuit in the chips to fail under certain circumstances, Sullivan said.
Because of the limited number of the faulty chips it has shipped, Sullivan said, the recall will not have a material financial impact on the company.
Intel began shipping the high-speed chips, which are priced at $990, in early July. Its first customers included IBM and Dell as well as a "handful of others," according to Sullivan.
A Dell spokesman told CNNfn.com Monday that it had stopped taking orders for systems with the 1.13 GHz chips because Intel had not been able to supply them in sufficient numbers to meet demand. An IBM representative did not immediately return phone calls seeking comment.
Intel is asking its customers to return the 1.13 GHz Pentiums they have received. Over the course of the next couple of months, Intel plans to change the design to address the faulty circuit and then resume production, according to Sullivan.
Although the latest snag won't cost Intel much in terms of dollars, it does give the Santa Clara, Calif.-based company its second technology black eye this year.
In May, Intel announced that it had recalled about a million circuit boards that contained faulty memory-translator hubs. That glitch ended up costing the company $200 million, which trimmed 2 cents per share off its second-quarter earnings.
The timing of the recall also plays well for Advanced Micro Devices (AMD: Research, Estimates), which has become an increasingly larger thorn in Intel's side. Even though neither one makes very much money at the high-end of the market, the two companies over the past year have been locked in a fierce battle of one-upmanship with each trying to outdo the other in microprocessor clock speeds.
AMD on Monday said it has begun shipping its fastest microprocessor, the AMD Athlon operating at 1.1 GHz, to 10 computer manufacturers, including Compaq (CPQ: Research, Estimates), Gateway (GTW: Research, Estimates) and Hewlett-Packard (HWP: Research, Estimates).
The new Athlons, which are priced at $853 each, are the latest in the Sunnyvale, Calif.-based company's seventh generation of microprocessors which have been giving Intel a real run for its money.
During the second quarter, AMD sold 1.8 million seventh-generation processors, a 52 percent increase from the first quarter. AMD executives are aiming to double shipments again in the third and fourth quarters, which are typically the chip industry's strongest.
Intel in the fourth quarter is expected to begin shipping the next generation of its Pentium processors, the Pentium 4, which will be available at speeds of 1.4 GHz and higher.
Shares of Intel added 94 cents to $73.88 on Nasdaq Monday, a 1.3 percent gain. AMD slipped 25 cents to $34.25 on the New York Stock Exchange.