     *** PENTIUM(TM) PROCESSOR REPLACEMENT POLICY PRESS RELEASE ***

   INTEL ADOPTS UPON-REQUEST REPLACEMENT POLICY ON  PENTIUM PROCESSORS WITH
   FLOATING POINT FLAW; WILL TAKE Q4 CHARGE AGAINST EARNINGS

   SANTA CLARA, Calif., December 20, 1994 -- Intel today said it will
   exchange the processor for any owner of a  Pentium(TM) processor-based
   system who is concerned about the subtle flaw in the floating point unit
   of the processor.  The company has been criticized in recent weeks for
   replacing processors on the basis of need rather than on request.  Intel
   will take a reserve against fourth quarter earnings to cover costs
   associated with the replacement program.

         The flaw can produce reduced precision in floating point divide
   operations once every nine billion random number pairs.  Intel said that
   while almost no one will ever encounter the flaw, the company will
   nevertheless replace the processor upon request with an updated version
   that does not have the flaw.  This offer will be in effect for the
   lifetime of a user*s PC, which means that users can conclude they do not
   currently want a replacement, but still have the option of replacing the
   chip in the future if they wish.  Intel is making a rapid manufacturing
   transition to the updated version, and expects to be able to ship
   sufficient replacement parts to meet demand during the next few months.

        "The past few weeks have been deeply troubling.  What we view as an
   extremely minor technical problem has taken on a life of its own," said
   Dr. Andrew S. Grove, president and chief executive officer. "Our OEM
   customers and the retail channel have been very supportive during this
   difficult period, and we are very grateful," Dr. Grove said.  "To
   support them and their customers, we are today announcing a
   no-questions-asked return policy on the current version of the Pentium
   processor.

        "Our previous policy was to talk with users to determine whether
   their needs required replacement of the processor.  To some people, this
   policy seemed arrogant and uncaring.  We apologize.  We were motivated
   by a belief that replacement is simply unnecessary for most people.  We
   still feel that way, but we are changing our policy because we want
   there to be no doubt that we stand behind this product."

        Intel will send a replacement processor to PC users who choose to
   do the replacement themselves, and will offer telephone technical
   assistance.  Call 1-800-628-8686 for details. Intel also said it planned

   to contract with service providers to do replacements at no charge for
   PC owners who prefer to bring their PC's to a service location.  Details
   will be provided in the next few weeks.  Finally, Intel said it would
   work with its OEM customers to provide replacement for PC users who
   prefer to work with the manufacturer of their system.

        The company said it would take an unspecified but material charge
   against fourth quarter earnings to cover costs associated with the
   replacement program announced today.  Intel said it was unable to
   determine the amount of the reserve, but said an estimated total will be
   provided on or before January 17, the date of Intel's 1994 financial
   results announcement.

        Intel, the world's largest chip maker, is also a leading
   manufacturer of personal computer, networking and communications
   products.


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End of file                 Intel FaxBack # 8802          20 December 1994
