SGI reveals its chips are down

The firm is playing down a problem with faulty R10000 chips in theface of a profit warning

Workstation giant Silicon Graphics has issued a profit warning for Q1 1997 and has revealed it is having to replace thousands of faulty R10000 chips.

The microprocessors suffer from what one SGI representative described as 'an early-life failure problem' which leads to total system shut down.

The need to replace chips made between March and July 1996 has been blamed in part for the fall in first quarter earnings, due to be announced on 17 October.

SGI is due to release a range of low-end workstations later this month and is keen to dispel any concerns the channel may have about quality.

Mike Clark, business unit manager of SGI's exclusive UK distributor Access Graphics, said the problem was not a major one. 'We were aware that there had been production problems, but as far as we can tell all of these have now been resolved.'

Willy Shih, VP of marketing for SGI advanced systems in the US, was at pains to play down the chip problems. 'This sort of thing happens to everyone, but you don't always hear about it,' he said.

'The problem came about as a result of one stage in the manufacturing process which has now been put right. When we find a problem with quality we don't try to disguise it, we consider this to be a preventive measure.

The UK channel can rest assured that the new products are not affected by this problem, we have resolved all outstanding quality issues.'

Shih added that the problems with revenue growth were caused partly by the need to replace the R10000 chips.