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http://www.nytimes.com/2005/10/25/technology/25server.html?th&emc=th

Quality Issues Delay a Chip From Intel

By LAURIE J. FLYNN Published: October 25, 2005 SAN FRANCISCO, Oct. 24 - Intel, the largest computer chip maker, said on Monday that it would postpone volume production of a new Itanium processor for network servers because of problems with the quality of the product.

The server chip, which is being developed under the code name Montecito, was scheduled for release in early 2006, the company said, but will now be shipped in "mid-2006." Intel would not provide details.

The delay amounts to something of a black eye for Intel, as it seeks to maintain its lead in server chips over Advanced Micro Devices. Jonathan Eunice, an analyst at Illuminata, a market research company, said, "The real impact here is it gives A.M.D. a longer window to attack."

An Intel spokesman, William E. Giles, said the company still expected Montecito to offer twice the performance of the current version.

Mr. Giles said that some additional work was required "to meet production-level quality standards before we ramp the chip into volume production."

The company said the delay in Montecito would push back release of its successor, called Montvale, to 2007, from 2006. A third iteration of the chip, Tukwila, will be delayed to 2008, from 2007.

The changes came as something of a surprise because Intel announced two weeks ago that it was stepping up delivery of another server chip, the Xeon DP, its first server chip that places two processing engines on a single core.

In trading Monday, shares of Intel declined 5 cents, to close at $23.10.

The company, based in Santa Clara, Calif., also said it was canceling a planned version of the microprocessor used in the coming Xeon MP chip set, code-named Whitefield, and would replace it with a chip with better performance, named Tigerton. It is scheduled to be released in 2007.