Intel discovers chip flaw in midst of major launch

Intel Corp found a defect in one of its chips, hurting its credibility during a major product launch and at a time when demand for microprocessors in PCs is being threatened.

The company said on Monday it stopped shipments of the chip used in personal computers with its most advanced Sandy Bridge line of processors and has already started production of a new version.

For Intel, the world's largest chipmaker, the design flaw is another distraction at a time when it faces sluggish personal computer sales and a major challenge from the exploding popularity of mobile devices, a market dominated by Britain's ARM Holdings.

"Does it change the perception of Intel's quality? Yes, probably. You've got real product out there that's been qualified and tested and green-lighted, and then you come back to say there's a problem and you have to recall," said Wedbush analyst Patrick Wang.

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