HP Says It Stopped Making PCs With Flawed Intel Chips

Hewlett-Packard Co., the world’s largest personal-computer maker, said it stopped making PCs with flawed Intel Corp. chips on Jan. 31 and put a hold on shipping affected inventory.

The malfunctioning chip, which Intel disclosed that same day, is mostly in certain consumer laptop and desktop models, HP said today in an e-mailed statement. HP also used the chip in a desktop PC marketed to small businesses in the U.K., said Marlene Somsak, a company spokeswoman. Customers can exchange affected products or get a refund, HP said.

Two business desktop PCs HP introduced at the Consumer Electronics Show in January -- the HP Compaq 8200 and the HP Compaq 6200 -- also use the affected chips. They are on manufacturing hold and haven’t begun shipping, Somsak said.

“We are evaluating our product road map in light of this industry issue,” Somsak said in an interview.

Intel, the world’s largest maker of semiconductors, said that it will incur $1 billion in missed sales and higher costs to fix the design flaw. The error also is affecting personal- computer makers including Samsung Electronics Co., which said it will offer refunds on some PCs, and NEC Corp., which said it may push back the release of four new models.

The fault is in a support chip, or chipset, for Intel’s latest processor model called Sandy Bridge, unveiled this month in a bid to improve PC graphics and repel a challenge by Advanced Micro Devices Inc.

Briefing Delayed

Palo Alto, California-based HP said yesterday that it will delay a product presentation scheduled for next week in San Francisco.

“We are postponing the business notebooks briefing on Feb. 10 as the availability of HP products will be impacted” by the Intel chip flaw, according to a statement sent to reporters yesterday by Edelman Public Relations Worldwide.

HP rose 37 cents to $46.89 at 4 p.m. in New York Stock Exchange composite trading. It declined 18 percent last year.

Dell Inc. spokesman David Frink said in an e-mailed statement that the Intel flaw affects four Dell products sold under its XPS, Vostro and Alienware brands.

“We’re committed to addressing this with customers who have already purchased one of the four products, will work directly with them and provide further detail as it becomes available,” Frink said.

Computers that use the potentially faulty chips have been sold since Jan. 9. Intel said it’s corrected the flaw and begun making a new version of the chip that will resolve the issue.

Intel expects to begin delivering an updated version of Sandy Bridge’s chipset, called Cougar Point, to customers in late February and be at full production in April. The company has shipped about 8 million of the Cougar Point chips to customers that will have to be replaced, Chief Financial Officer Stacy Smith said on a Jan. 31 conference call.

HP had planned to discuss the notebook computers, aimed at business customers, with journalists next week, before officially unveiling them to the public on Feb. 23, according to an earlier e-mail from Edelman.

To contact the reporters on this story: Aaron Ricadela in San Francisco at aricadela@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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