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Flaw in Intel Xeon 550 Chips: Shipments Stopped

Written By: R. Krause
Published On: September 29 1999

Event Summary

Sep 24, 1999 - Intel Corporation officials confirmed that the company has put a hold on shipping two versions of its 550-MHz Pentium III Xeon chips to OEMs for at least two weeks because of a bug that is causing eight-way servers to freeze on boot-up.

To this point the glitch has been limited to versions of the chip containing the 512Kb and 1MB caches. Vendors such as Compaq, who have chosen not to utilize the Saber motherboard, have not experienced any problems to date.

Market Impact

In the short term, this will put a damper on the overall eight-CPU Intel server market, because vendors will be unable to ship systems, and some customers will delay purchases until they see that the problem has been fully resolved. This puts Dell Computer and Hewlett-Packard at a disadvantage, since they use the Saber board set as the core of their servers. Compaq Computer will have both a short-term advantage and potential disadvantage. The disadvantage arises from the possibility of the marketplace not differentiating between the Saber-based and non-Saber-based servers, thereby lumping Compaq's unaffected servers with those that are affected. Compaq's advantage comes from having an even greater head start on Dell and HP. The long-term effects on the overall market (assuming Intel solves the problem 95+% probability) will be negligible, since the overall demand for eight-way servers will not decrease. Compaq should accrue some long-term benefit, especially if customers decide that Compaq's development engineers add more value than the competition does.

User Recommendations

Users planning an eight-way Intel server purchase (from a vendor using the Saber motherboard) should consider delaying that purchase until Intel has adequately demonstrated that they have solved the problem. Although caution is always prudent when a problem like this surfaces, users planning to buy from Compaq should be less concerned.

 
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