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Intel to take $200M Q2 charge for motherboards fix

Intel to take $200M Q2 charge for motherboards fix

Intel will take a charge of around $US200 million in its upcoming second financial quarter to cover the remaining costs of a program to replace faulty motherboards, the chip giant announced Tuesday.

The charge will be equivalent to about 2 cents per share, and will be taken against cost of sales, Intel said.

Intel last month announced a program to replace faulty PC motherboards designed around its 820 chip set. The chip set's memory translator hub (MTH), which translates signals from synchronous dynamic random access memory (SDRAM) to the 820 chip set, was faulty, potentially causing systems to fail or data to be corrupted.

Intel warned that the estimated $200 million charge is based on its current expectations concerning both the user replacement rate and the cost of replacing the motherboards, and is subject to change.

Tuesday's news brings the amount the company will spend on fixing the motherboard problem to $253 million, since Intel made a provision for $53 million, or less than 1 cent per share, for the issue in its first-quarter results.

On a more positive note, Intel also announced Tuesday that it expects interest and other income for the second quarter to total around $2.3 billion, up from its previous estimate of $725 million, due to strong gains on the sell-off of equity investments.

Intel is due to release its second-quarter results July 18. Current estimates call for the company to post a profit of 71 cents a share, according to First Call/Thomson Financial.


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