Intel investigates counterfeit processors; 300 fake chips [Updated]

As Neowin reported during the weekend, Newegg shipped out counterfeit Intel i7 processors to customers, where customers received a clay mold of a heatsink, and even a piece of scrap metal as the processor.  Intel will investigate why there was counterfeit processors shipped out to customers and exactly how many were shipped, according to PCWorld.

Intel has confirmed that there is at least one case of these counterfeit processors, and according to Engadget, Newegg’s long time partner, D&H Distribution, accidentally got a hold of 300 fakes in a batch of 2,000.  It doesn’t seem that everyone believes Newegg when they say they received “incorrect inventory.”

Engadget even mentions that the company has started to send out cease-and-desist letters to websites that publishes the news.

An Intel spokesperson confirms the existence of the fake Intel i7 chips in an email, "The examples we have seen are not Intel products but are counterfeits."  This contradicts the press statement issued by Newegg over the weekend, claiming the chips are “demo units”:

“Newegg is aware of a shipping error that occurred with certain recent orders of the Intel Core i7-920 CPU. After investigating the issue internally it appears one of our long term partners mistakenly shipped a small number of demo boxes instead of functional units. Our customer service team has already begun proactively reaching out to the affected customers. In line with our commitment to ensure total customer satisfaction, we are doing everything in our power to resolve the issue as soon as possible and with the least amount of inconvenience to our customers.”

Update: Newegg has has confirmed the existance of these counterfeit Intel i7 chips, and have discontinued their relationship with the supplier in their statement:
Newegg is currently conducting a thorough investigation surrounding recent shipments of questionable Intel Core i7-920 CPUs purchased from Newegg.com.

Initial information we received from our supplier, IPEX, stated that they had mistakenly shipped us "demo units." We have since come to discover the CPUs were counterfeit and are terminating our relationship with this supplier. Contrary to any speculation, D&H Distributing is not the vendor that supplied us with the Intel Core i7-920 CPUs in question.

Newegg’s top priority is to proactively reach out to all customers who may have been affected to ensure their absolute satisfaction. We have already sent out a number of replacement units and are doing everything in our power to resolve the matter promptly and with the least amount of inconvenience to our customers.

We have always taken pride in providing an exceptional experience for each customer, and we apologize for any inconvenience to our valued customers. We take matters like this extremely seriously, and are working in close cooperation with Intel and the appropriate law enforcement authorities to thoroughly investigate this incident.

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66 Comments

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I can't imagine these poor imitations were even allowed to leave a NEWEGG distribution center. I have been buying components from the egg for years and recommend them almost exclusively to friends. This single incident wouldn't stop me from buying from them again.
The idea that any reputable company would jeopardize their name selling this stuff for a few bucks is ludicrous. This looks like a switch was done along the supply chain.
Maybe NewEgg should give everybody they shipped one of these to a Toyota for their pain and suffering.

I'm surprised that NewEgg is procuring these units from anyone other than Intel. Why is there a need for a middle person in the distribution channel?

Why doesn't Newegg return all the core i7 cpu's to Intel to check? Does anybody know of another online sites like Newegg where I can buy computer parts?

I don't understand why they are calling these chips counterfeit. This implies that the chips received worked but are not in fact NOT a REAL product released by the stated manufacture. It looks like the press is trying to go above and beyond just for a splashy story. There was NEVER any possibility of the chips working, so they can't be labeled counterfeit.

It is clear that someone ripped off x many processors. No legitimate business is to blame, unless they had knowledge of this. It's a crime, and severing ties with distributors or suppliers before getting to the bottom of the theft is just irresponsible as it might hurt someone that is innocent.

While 300 processors is a lot of money on the open market; is it really enough for any legitimate company to do this knowing that there is a 100% chance of it being detected, and traced back through the supply chain.

Will I stop doing business with any of them; no. Really, did anyone ever know the actual suppliers behind Newegg.

These are very poor counterfeits, most of the items down at the local market or on ebay which are counterfeit at least work.
It reminds me of the guy who used to sell `video recorders` out the back of a van, the box actually had a couple of bricks rapped in newspaper :->

Nothing is going to stop incidents like this occuring, especially with high end products like the i7. You have to feel a bit sorry for Newegg as they didn`t have much control over this, or did they?

Newegg wouldn't dare say it was only their supply of demos accidentally shipped now. Who carries 300+ demo products and the openly sells them without knowing their true lack of authenticity?

Even though I have never used NewEgg, they have an awesome rep. And are doing the right thing by cutting all ties with this 'dodgy' supplier.

Wow. Now just to find out how the distributor got ahold of counterfeit processors... Seems like they were up to something... :-\

I love half of the comments on this article. So newegg made a mistake and you intend to switch to a new online supplier? How many times has Microsoft made mistakes, did you switch to Linux or OS X on the first mistake?

We are human. Well most of us anyways ;), we all make mistakes though. I bet everyone who is switching to a new supplier because of this 'mistake' have made plenty of mistakes in their lives.

Rather then complaining about what happened, praise them for the measures they are taking to prevent it from happening again.

^This should be in the news post. I think everyone should see what Newegg has to say, considering people really ARE jumping to conclusions.

Tekkerson said,
^This should be in the news post. I think everyone should see what Newegg has to say, considering people really ARE jumping to conclusions.

It is now

Do you really think NewEgg would do this on purpose? Like they thought customers wouldn't notice the difference? Come on, guys. Someone shafted D&H, who accidentally passed it on to Newegg, who accidentally passed it on to their customers. The only people at fault are the ones who created the processor...maquettes.

i want one of these. anyone willing to ebay one? although i won't pay more than 5 dollars :P shipping included.

Newegg is one of the best out there! A mistake can be made by anyone, the important thing is how they respond to the problem

daniel_rh said,
A mistake can be made by anyone ...

Sounds like someone at the distributor or somewhere in the line pulled a switch. I wouldn't necessarily call it a mistake. It's more likely, they had no clue it had happened. This sort of thing happens all the time with DVDs in retail. The only thing that doesn't make sense is why the cardboard box isn't legit (spelling mistakes).

daniel_rh said,
... the important thing is how they respond to the problem

Exactly.

Edited by QuarterSwede, Mar 8 2010, 11:31pm :

QuarterSwede said,

The only thing that doesn't make sense is why the cardboard box isn't legit (spelling mistakes).

because presumably they're switching to resell. If you want to resell at a maximum pricel then you need the original box!

java2beans said,
Does anyone know another alternatives to Newegg? Any other good online computer suppliers?

You're going to stop doing business with NewEgg because they received counterfeit processors? It's not their fault. They seem to be proactive in replacing the processors for people.

java2beans said,
Does anyone know another alternatives to Newegg? Any other good online computer suppliers?

some people are born a bit 'slower' then others.... :(

thunderclap82 said,

You're going to stop doing business with NewEgg because they received counterfeit processors? It's not their fault. They seem to be proactive in replacing the processors for people.

Who says I'm going to stop doing business with NewEgg? I just want to compare prices.

What was that, sorry I couldn't listen to all the newegg banter I was too busy completeing an order from newegg.com.

Mistakes happen, newegg is eggtastic enough to fix there mistakes.

Klownicle said,
What was that, sorry I couldn't listen to all the newegg banter I was too busy completeing an order from newegg.com.

Mistakes happen, newegg is eggtastic enough to fix there mistakes.

Yep, I've been a huge fan since their first year (remember free 3-day shipping?), and to this day, new computer builds are a matter of comparing prices between Newegg and ZipZoomFly, and usually ordering a little from each.

Joshie said,

Yep, I've been a huge fan since their first year (remember free 3-day shipping?), and to this day, new computer builds are a matter of comparing prices between Newegg and ZipZoomFly, and usually ordering a little from each.

If you live near a MicroCenter and can take advantage of their in store pricing, add them to the mix. i7 920's have always been cheaper at MicroCenter than anywhere online I've looked it.

zeke009 said,
If you live near a MicroCenter and can take advantage of their in store pricing, add them to the mix. i7 920's have always been cheaper at MicroCenter than anywhere online I've looked it.

I do not. I live in Virginia, and nowhere near the beltway, which is the only place that gets any love in this state (tax dollars, too). Even our own state capital is a dump compared to Northern VA.

They can't be Demo Units, how is anyone going to demo a fake chip and a clay heatsink?
It's no big deal really, NewEgg will fix the issue and send new products, Intel will investigate and punish whoever distributed the chips and it will be the end of the story.
No need to never buy anything from NewEgg again, if you're going to do that, then you might as well switch to AMD as it was Intel chips distributed...

This was probably an inside job at their distributor. From videos on youtube, it looks like the people knew what they were doing to even get around suspicion from shipping weight. See the blank pad of paper there? It's just to add weight to the box.

The article (And the linked one) state that "the company" is sending out C&D orders. Who is "the company"? Is it Newegg, D&H, or Intel?

Joey H said,
The article (And the linked one) state that "the company" is sending out C&D orders. Who is "the company"? Is it Newegg, D&H, or Intel?

D&H, although Engadget seem to be afraid to clearly say it.

People are so eager to see conspiracy where there is none. It's not like Newegg is going to ship bad products that are incapable of working, which they would only have to replace at their cost, and only hurt their image and bottom line.

Guys, use your brains. Newegg clearly had no idea what went wrong, and made a statement before fully investigating. The article clearly states that Neweggs distro had sent them the counterfeit chips. With that said, Newegg is in the clear, and their Disto. was the one who made the mistake.

Reading is so hard these days.

Wasn't this just a shipping accident? Just wait and Newegg will send you the right processor and if time is an issue, complain and maybe they will chop off a little percentage.

Newegg likely got snookered by a distributor. Certainly some egg on their face (pardon the pun) from a vendor management standpoint, but hardly the first time this has happened in retail. I'm sure Newegg will change some procedures internally to address the oversight.

Why are they sending out C&D orders? Can't they take the truth? There was fake processors sent out, saying so is somehow bad now? Yes it hurts the company, but they should not be able to stop the fact this happened from getting out into the public

neufuse said,
Why are they sending out C&D orders? Can't they take the truth? There was fake processors sent out, saying so is somehow bad now? Yes it hurts the company, but they should not be able to stop the fact this happened from getting out into the public

Perhaps they are waiting until all the FACTS are available before releasing the info? This might be a shock, but people on the Internet jump to conclusions!

neufuse said,
Why are they sending out C&D orders? Can't they take the truth? There was fake processors sent out, saying so is somehow bad now? Yes it hurts the company, but they should not be able to stop the fact this happened from getting out into the public

You should consider finding an example of an article that received a C&D letter. They might be ones making false negative assumptions/accusations toward Newegg, which would be grounds for the request.

I think it is to soon to blame Newegg, but it doesn't seem odd that their statement is contradicted by Intel. Hopefully Intel's investigation figures all this mess out. I hope this doesn't hurt Newegg (in the sense of supply and prices) though, I buy almost everything IT-related from them.

Hurmoth said,
I think it is to soon to blame Newegg, but it doesn't seem odd that their statement is contradicted by Intel. Hopefully Intel's investigation figures all this mess out. I hope this doesn't hurt Newegg (in the sense of supply and prices) though, I buy almost everything IT-related from them.

It will hurt newegg!!! I am not going to buy anything from newegg again..

still1 said,

It will hurt newegg!!! I am not going to buy anything from newegg again..

If you dont buy anything again from a company that has made a mistake, then you won't be buying anything from anyone large again.....

Edited by neufuse, Mar 8 2010, 8:17pm :

still1 said,

It will hurt newegg!!! I am not going to buy anything from newegg again..

Based on a bunch of Internet posts and opinions? As long as newegg it taking care of the impacted customers (verified that they are) there is not a story here.

I agree. I've been dealing with NewEgg for years and I've never been disappointed be delivery, RMA, product... anything. I find they are very reputable. I don't understand people who are already swearing them off. It was a mistake. Theirs? Maybe. It's too early to tell. But considering they reacted as soon as it was brought to their attention makes me comfortable continuing my business relation with them.

still1 said,

It will hurt newegg!!! I am not going to buy anything from newegg again..

Yes, because Newegg said it was a mistake, and Intel said it was a mistake, and everyone is saying it was a mistake, and Newegg replaced every single bad shipment as a courtesy as well as making the issue public instead of trying to cover it up (together more than most companies would ever do), and you weren't even one of the affected customers--you're still going to boycott Newegg from now until you die, no matter what.

I can't help but feel like you've never had any kind of job at all, ever. It makes no sense that someone could have experience being part of a business and have that sort of attitude. You sound like you live on someone else's dime.

/seriously WHAT is up with this weird way Neowin ignores the first line-skip after a quote? I'm tired of my first two paragraphs jamming up together just because I forgot to put an extra blank line after the quote.

Edited by Joshie, Mar 8 2010, 10:13pm :

Joshie said,

and Newegg replaced every single bad shipment AS A COURTESY

Companies these days are fantastic aren't they, they give you courtesy replacements for the wrong item...hmmm,

I would at least expect some sort of apology and maybe a small token amount of store credit, a replacement or refund is their minimal legal obligation, and is not a generous act / apology in anyway.

Courtesies are generally above and beyond the minimum expected (freebies, and tokens of politeness), or otherwise offered in-spite of facts (eg. a company giving a discount on foreign mobile use even though it was the customers fault for not enabling or requesting a travel coverage extra).

lt8480 said,

Companies these days are fantastic aren't they, they give you courtesy replacements for the wrong item...hmmm,

I would at least expect some sort of apology and maybe a small token amount of store credit, a replacement or refund is their minimal legal obligation, and is not a generous act / apology in anyway.

Courtesies are generally above and beyond the minimum expected (freebies, and tokens of politeness), or otherwise offered in-spite of facts (eg. a company giving a discount on foreign mobile use even though it was the customers fault for not enabling or requesting a travel coverage extra).

Couldn't have said it better myself.

It is funny how low our expectations have become. The bare minimum legally done by companies get them praise as if they have done something worthy of praise.

I too am not buying anything from NewEgg. Sorry, but I don't shop at places I can't trust.

lt8480 said,
I would at least expect some sort of apology and maybe a small token amount of store credit, a replacement or refund is their minimal legal obligation, and is not a generous act / apology in anyway.

Courtesies are generally above and beyond the minimum expected (freebies, and tokens of politeness), or otherwise offered in-spite of facts (eg. a company giving a discount on foreign mobile use even though it was the customers fault for not enabling or requesting a travel coverage extra).


Everyone always wants money.

Newegg are basic box movers to minamise cost. Intel box's come in, each box sent out. If something goes wrong they try and fix it as best they can. Newegg could not have seen this coming so i dont think the retailer should be pointed at. Its a supplyer fault, in this case D&H Distribution, just cuz you dont deal with them does not make it someones elses fault. Newegg did what had to be done to fix the issue and IMO as long as they pay for the pickup of the old and return of the new i think they have done their duty.

Frazell Thomas said,

Couldn't have said it better myself.

It is funny how low our expectations have become. The bare minimum legally done by companies get them praise as if they have done something worthy of praise.

I too am not buying anything from NewEgg. Sorry, but I don't shop at places I can't trust.

I challenge you to name one single major internet retailer that hasn't had a similar case.

Every large-scale computer parts retailer has at some point shipped a refurb when a customer ordered new, A revisions when a customer ordered a B revision, DOAs, etc. To live up to your philosophy would require boycotting computers themselves.

brent3000 said,

Everyone always wants money.

Newegg are basic box movers to minamise cost. Intel box's come in, each box sent out. If something goes wrong they try and fix it as best they can. Newegg could not have seen this coming so i dont think the retailer should be pointed at. Its a supplyer fault, in this case D&H Distribution, just cuz you dont deal with them does not make it someones elses fault. Newegg did what had to be done to fix the issue and IMO as long as they pay for the pickup of the old and return of the new i think they have done their duty.

Companies usually have procedures where they fine suppliers in these sorts of circumstances. To take just an example, if you take a "faulty" food item back to Tesco - Tesco will fine the supplier something like £50 regardless to the value of the item - this is usually why supermarkets will give you freebies when you do so.

There is a good chance that Newegg will be fining the supplier (at the least), why shouldn't the consumer get something additional from that fine for their inconvenience of not having the product when they expected, and probably some expense themselves. Do newegg pay for the return shipping, and they are wasting your time etc.

Edited by lt8480, Mar 9 2010, 7:06am :

still1 said,

It will hurt newegg!!! I am not going to buy anything from newegg again..

It takes many good incidents to gain a customers trust, one bad one to lose it. I hate people like you.

still1 said,

It will hurt newegg!!! I am not going to buy anything from newegg again..

I've been dealing with Newegg for years and in all those many years of doing business with them, I have never once lost trust. I've had a few screw ups with some orders, but a simple phone call gets it fixed. You are also being a bit, well actually a lot, whiny on an issue that had absolutely ZERO effect on you.

Edited by iamwhoiam, Mar 9 2010, 8:15am :

Unclean009 said,

It takes many good incidents to gain a customers trust, one bad one to lose it. I hate people like you.

So, you hate Neweeg then because that's EXACTLY what they are doing. One screw up from D&H and they're dumping them, so why shouldn't I dump Newegg for this one MAJOR screw up?

cork1958 said,

So, you hate Neweeg then because that's EXACTLY what they are doing. One screw up from D&H and they're dumping them, so why shouldn't I dump Newegg for this one MAJOR screw up?


We don't know that. Maybe this is just one of many screw ups by their supplier that NewEgg is having to straigten out. Maybe the other screw ups just didn't get press.

NeoandGeo said,
Woops

Funny enough...I purchased an i7-930 that arrived about the same time that these reports started... I have NO clue why somebody would have gotten the 920 instead though...The 930 is only $10 more. :)

Glad I spent the extra $10! Otherwise it may have turned in to a paperweight sooner than I had expected!