Sandy Bridge Bug 2X Costly as Pentium Math Bug
Intel's surprising note that it has discovered a "circuit design issue" in the 6-series chipset is reminiscent of the 1993 FDIV bug. Intel's quality control may not be as fail-safe as the company claims.
The FDIV bug was a catastrophic design flaw in the original Pentium (P5) processor that caused certain floating point divisions to produce false results. It was a rather controversial problem and extremely rare as only one in 9 billion operations was believed to be affected by the flaw, but Intel was forced to recall and correct the issue. The company initially expected the cost to be in the neighborhood of $300 million, but ended up paying about $475 million in total.
We don't know much about the Sandy Bridge SATA bug announced today, other than the chipset could see its SATA connection deteriorate and cause the performance of SATA devices such as hard drives decline. Intel says not many consumers are affected and it has already begun manufacturing new Sandy Bridge devices. However, the company expects the issue to cost about $700 million, which isn't exactly a number for a minor issue. Semiconductor companies are traditionally conservative with their estimates how much such issues could cost in the end and there is a good chance that the SB problem will cost Intel nearly twice as much as the 1993 FDIV bug.
We should note that Intel has an elaborate structure of quality control in place: there are more than 3000 engineers worldwide who are testing new chip designs usually for at least 9 months before a chip is commercially released. This structure has been created following the FDIV bug specifically to avoid scenarios such as the announced Sandy Bridge circuit design "issue." With a $700 million bill and the stock market fallout still to be seen, Intel may be looking into ways on how to improve its quality control system -- especially since the company is trying to figure how to make its way into other high-volume markets such as mobile phones and consumer electronics.
There have been some reports from the side of AMD ridiculing Intel's mistake, but we should be fair and recognize that microprocessors are highly complex marvels and engineering and AMD has made mistakes as well - such as the TLB bug in the company's first quad-core server processor - the 2007 Opteron CPU with Barcelona core.

I was thinking about buying one, now this news come out.. no way I will buy in the near future.
You mean "it's way better than 2X"
I got myself tied up with the "it's way worse than 2X" earlier; if I'm correct, $475 million would be worth about $700 million nowadays, so we're still some way short of it being twice the pain for Intel, even at $1 billion. It's still lower than the AMD and nVidia settlements and they won't have any real issues paying it.
If Nvidia was still around for example, people could still buy a Nvidia motherboard to go with the Intel Sandy Bridge CPU. As it is, Intel loses twice: people will hold off from buying not only the affected motherboards (which accounts to ALL of them right now), but it will also not sell the brand new CPU's.
I think it's Nvidia right now that must be laughing and not exactly AMD.
Intel wanted to be alone in the chipset business, now it has to take on all the inherent risks of that decision too. There was a very good reason IBM told Intel in the beginning that it would only order chips from them if there was a second CPU licensee - they wanted the supply risk at a minimum.
EDIT: Newegg just took offline not only all LGA 1155 based motherboards, but also all Sandy Bridge Core i5's and i7's.
IB
Great way to detract attention from the culprit.