Intel on Monday said it had stopped shipments of the chipset used with its latest generation of Core processors after it found a design flaw.

The flawed chipset was used in PCs with the next-generation Core processors based on the Sandy Bridge architecture, which were introduced last month at the Consumer Electronics Show. Intel has stopped shipment of the affected support chip, and the design issue has been fixed, Intel said.

While the Core processors remain unaffected, customers who purchased systems with second-generation Core i5 and Core i7 quad core microprocessors could be affected by the chipset issue, Intel said.

However, Intel said that "consumers can continue to use their systems with confidence" as the chip maker works with partners to deliver a permanent solution. This could include a support chip that resolves the issue.

Intel discovered a design issue in the 6-Series chipset, which is code-named Cougar Point, and is used in systems with Sandy Bridge processors, which started shipping on Jan. 9. Intel said the Serial-ATA (SATA) ports within the chipsets could degrade over time, which could impact performance or functionality of storage devices such as hard drives.

"The company expects to begin delivering the updated version of the chipset to customers in late February and expects full volume recovery in April. Intel stands behind its products and is committed to product quality," the company said in a statement.

The problem is expected to reduce revenue by about US$300 million for the first quarter of 2011 as Intel discontinues production and starts manufacturing the modified chipset. Intel said that full-year revenue is not expected to be materially affected by the issue.

This is a big setback for Intel, which is known for flawless chip designs and was pinning hopes on Sandy Bridge chips to deliver close to a third of the revenue during fiscal 2011.