The company says the chip could cause system errors when running certain programs and at a particular temperature.
The problem is with certain circuits of the chip that have been shown to malfunction in laboratory tests under certain conditions, said Intel spokesman Howard High. Intel said it has not received reports from customers of any problems, but the glitch has been noted by some hardware review sites in recent days.
As first reported by CNET News.com, Dell Computer and IBM have stopped shipping PCs with the processor. Intel said it will work with those companies to satisfy existing customers.
"Clearly if they want a replacement, then we will replace (it)," High said. "If they want a refund, we'll accommodate them."
The 1.13-GHz chip began shipping July 31 in limited quantities.
Intel would not say exactly how many 1.13 GHz chips have shipped, but analysts said the number is quite small.
"There can't be very many--tens of thousands at most," said Linley Gwennap, principal analyst at The Linley Group. "I wouldn't be surprised if it was under 10,000."
Word of the glitch comes on the same day as rival Advanced Micro Devices announced shipments of its 1.1-GHz Athlon.
Analysts say competition with AMD may have caused Intel to release a chip that wasn't ready.
"It sounds like Intel may have pushed a little too hard," said chip analyst Peter Glaskowsky of MicroDesign Resources. "It shows the Pentium III is not really capable of reaching these levels."
Gwennap noted that Intel did not originally have the 1.13-GHz chip on its road map and has struggled to produce the 1-GHz chip in enough quantity to satisfy customers.
"When you push the clock speed beyond what it was designed to do, you run into problems," Gwennap said. "They rushed to get the 1-GHz chip out, and they couldn't produce enough of them."
Intel said it has identified the cause of the problem and will fix it by redesigning the circuits in question.
"It's probably a couple of months before we get units back into the marketplace," High said.
Although other Pentium III processors have the same design, Intel said it has not found the same problem in other chips.
"We've done quite a bit of testing, and we haven't seen anything," High said.
Intel said the fact that it had not shipped many of the processors will make the problem easier to remedy than past glitches, such as the bug with the 820 chipset. In that case, computer motherboards with the defective chipset were sold through distributors and available in computers from many retailers.
"We're kind of early in the process, which is a benefit with something like this," High said.
Only Dell, IBM and a few European companies had been selling systems with the 1.13-GHz chip. Intel said it is recalling chips that have not yet been sold and has halted its shipments of the processor.
High said various computer hardware review sites began noting a problem with certain kernels of the Linux operating system. Intel at first could replicate the problem only when the chips were operated outside recommended temperature specifications. Over the weekend, it began noticing problems even within the chip's specifications.
Intel executives said it was too soon to say how much the bug might cost, but the cost will not be material to Intel's earnings.
In addition to the glitch that forced the recall of the 820 and the delay of the low-end Timna chip, Intel has had delays and performance issues with its forthcoming Itanium chip, which is aimed at high-end servers.
Gwennap noted that Intel's manufacturing woes over the past year--and AMD's success--reverse what had been the trend.
"For a long time, Intel was this machine that couldn't break and AMD couldn't take two steps without tripping," Gwennap said. "For the past year, Intel has been having problem after problem, and AMD keeps cranking out more and more chips."
Gwennap said that while the Pentium III may have hit its limit, Intel will be able to introduce chips at much faster speeds when it debuts the Pentium 4 later this year.
The Pentium 4 design "clearly allows higher clock speeds," Gwennap said. "That's one of the reasons they are moving to a new architecture."