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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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.

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!

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

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.

^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

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.

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

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.

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?

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?

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.

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'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?

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.

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