Intel took a $475 million charge against Q4 1994 gross margin after reversing course and recalling the flawed Pentium

When the Pentium division defect became public in late 1994 (see claim-nicely-twin-prime-project-surfaced-pentium-fdiv-bug), Intel's initial position was that the flaw was statistically negligible for ordinary users and that replacements would be offered only to customers who could demonstrate they were affected. Sustained public and press pressure through November and December forced a reversal: Intel adopted an unconditional no-questions-asked replacement policy for the affected processors.

The cost of that reversal is stated plainly in Intel's own SEC filing for the period, which records that "fourth quarter gross margin was reduced by $475 million." The charge — a pre-tax write-down announced on 17 January 1995 — covered the replacement and write-off of the defective inventory, and stands as the headline financial figure of the episode: the most expensive consequence, by orders of magnitude, of a five-cell omission in a quotient-digit lookup table.

The episode is frequently cited as a landmark in how a hardware maker handles a defect discovered in the field — the moment a chip company accepted that a subtle arithmetic error in a consumer product warranted a full recall rather than a case-by-case exchange. It belongs to the same lineage of Intel-arithmetic history as the standardization effort in claim-kahan-8087-spec-became-ieee-754 and, further back, the early Intel silicon of claim-ted-hoff-widrow-phd-student-architected-intel-4004.