INTEL Case Study

The Intel Pentium ® Chip

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In late 1994, the media began to report that there was a flaw in the new Pentium
microprocessor produced by Intel. The microprocessor is the heart of a personal computer and
controls all of the operations and calculations that take place. A flaw in the Pentium was especially
significant, since it was the microprocessor used in 80% of the personal computers produced in the
world at that time.

Apparently, flaws in a complicated integrated circuit such as the Pentium, which at the time
contained over one million transistors, are common. However, most of the flaws are undetectable
by the user and don’t affect the operation of the computer. Many of these flaws are easily
compensated for through software. The flaw that came to light in 1994 was different: It was
detectable by the user. This particular flaw was in the floating-point unit (FPU) and caused a wrong
answer when double-precision arithmetic, a very common operation, was performed.

A standard test was widely published to determine whether a user’s microprocessor was
flawed. Using spreadsheet software, the user was to take the number 4,195,835, multiply it by
3,145,727, and then divide that result by 3,145,727. As we all know from elementary math, when a
number is multiplied and then divided by the same number, the result should be the original
number. In this example, the result should be 4,195,835. However, with the flawed FPU, the result
of this calculation was 4,195,579 [ Infoworld , 1994]. Depending on the application, this six
thousands- of-a-percent error might be very significant. At first, Intel’s response to these reports
was to deny that there was any problem with the chip. When it became clear that this assertion was
not accurate, Intel switched its policy and stated that although there was indeed a defect in the chip,
it was insignificant and the vast majority of users would never even notice it. The chip would be
replaced for free only for users who could demonstrate that they needed an unflawed version of the
chip [Infoworld , 1994]. There is some logic to this policy from Intel’s point of view, since over two
million computers had already been sold with the defective chip.

Of course, this approach didn’t satisfy most Pentium owners. After all, how can you predict
whether you will have a future application where this flaw might be significant? IBM, a major
Pentium user, canceled the sales of all IBM computers containing the flawed chip. Finally, after
much negative publicity in the popular personal computer literature and an outcry from Pentium
users, Intel agreed to replace the flawed chip with an unflawed version for any customer who asked
to have it replaced.

It should be noted that long before news of the flaw surfaced in the popular press, Intel was
aware of the problem and had already corrected it on subsequent versions. It did, however,
continue to sell the flawed version and, based on its early insistence that the flaw did not present a
significant problem to users, seemingly planned to do so until the new version was available and
the stocks of the flawed one were exhausted. Eventually, the damage caused by this case was fixed
as the media reports of the problem died down and as customers were able to get unflawed chips
into their computers. Ultimately, Intel had a write-off of 475 million
dollars to solve this problem.

What did Intel learn from this experience? The early designs for new chips continue to have
flaws, and sometimes these flaws are not detected until the product is already in use by consumers.
However, Intel’s approach to these problems has changed. It now seems to feel that problems need
to be fixed immediately. In addition, the decision is now based on the consumer’s perception of the
significance of the flaw, rather than on Intel’s opinion of its significance.

Indeed, similar flaws were found in 1997 in the early versions of the Pentium II and
Pentium Pro processors. This time, Intel immediately confirmed that the flaw existed and offered
customers software that would correct it. Other companies also seem to have benefited from Intel’s
experience.

Questions

1. Use one of the engineering codes of ethics to analyze this case. (Check IEEE Code of Ethics, at
the end of the document).

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2. How did INTEL learn from its previous experience?

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3. Elaborate on the following diagram from IBM/
INTEL/ or Customer’s POINT OF VIEW.
 2. Collect
information

6.
3. State the
Implement
Options
the Decision

1. Identify the Problem

4. Apply
5. Make the Ethical
Decision Principles to
the options
THE INSTITUTE OF ELECTRICAL AND ELECTRONICS
ENGINEERS, INC. * (IEEE)

We, the members of the IEEE, in recognition of the importance of our technologies affecting
the quality of life throughout the world, and in accepting a personal obligation to our
profession, its members, and the communities we serve, do hereby commit ourselves to the
highest ethical and professional conduct and agree:

1. to accept responsibility in making decisions consistent with the safety, health and welfare
of the public, and to disclose promptly factors that might endanger the public or the
environment;

2. to avoid real or perceived conflicts of interest whenever possible, and to disclose them to
affected parties when they do exist.

3. to be honest and realistic in stating claims or estimates based on available data;

4. to reject bribery in all its forms;

5. to improve the understanding of technology, its appropriate application, and potential

6. to maintain and improve our technical competence and to undertake technological tasks
for others only if qualified by training or experience, or after full disclosure of pertinent
limitations;

7. to seek, accept, and offer honest criticism of technical work, to acknowledge and correct
errors, and to credit properly the contributions of others;

8. to treat fairly all persons regardless of such factors as race, religion, gender, disability,
age, or national origin;

9. to avoid injuring others, their property, reputation, or employment by false or malicious

10. to assist colleagues and co-workers in their professional development and to support
them in following this code of ethics. Approved by the IEEE Board of Directors, February
2006