Intel has discovered a design error in Cougar Point, the data connection chip supporting Intel’s CPU/GPU hybrid Sandy Bridge microprocessors, specifically in the Core i5 and Core i7 quad-core chips. Intel’s stocks are down one percent after it stopped Sandy Bridge production, a move which will in turn cost it approximately $700 million in revenue.

“The flaw, by which the SATA-ATA ports degrade over time and affect the performance of DVD and hard-drives, will cost the company approximately $700 million in revenue, $300 million of which will impact the company’s finances in the first quarter of 2011.”

Analysts’ reaction to the error is moderate; this is certainly not good news for the company. Intel is relying on the Sandy Bridge generation to move into a new direction where many competitors are also developing new hardware in light of growing consumer demand, and the delay the error has caused is indeed disruptive.

Another factor which would’ve has been even more disruptive for Sandy Bridge was Nvidia’s patent lawsuit against Intel, which was resolved after $1.5 billion in settlements.

Intel’s stocks may have taken a hit today, but AMD seen a 6% surge. Intel’s competitors, namely AMD and ARM are working on Sandy Bridge alternatives, and SiliconANGLE covered the happenings. That includes the launch of AMD’s Radeon 6900 chip and rumors surrounding Windows running on ARM CPU Architecture.