Newegg Releases Statement Regarding Fake Processors

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Newegg has released a statement that sheds some light on the fake processor story we have been following since Friday:

Newegg is currently conducting a thorough investigation surrounding recent shipments of questionable Intel Core i7-920 CPUs purchased from Newegg.com.

Initial information we received from our supplier, IPEX, stated that they had mistakenly shipped us “demo units.” We have since come to discover the CPUs were counterfeit and are terminating our relationship with this supplier. Contrary to any speculation, D&H Distributing is not the vendor that supplied us with the Intel Core i7-920 CPUs in question.

Newegg’s top priority is to proactively reach out to all customers who may have been affected to ensure their absolute satisfaction. We have already sent out a number of replacement units and are doing everything in our power to resolve the matter promptly and with the least amount of inconvenience to our customers.

We have always taken pride in providing an exceptional experience for each customer, and we apologize for any inconvenience to our valued customers. We take matters like this extremely seriously, and are working in close cooperation with Intel and the appropriate law enforcement authorities to thoroughly investigate this incident.

(Received by email: Monday, March 8, 2010 – 7:26 PM EST)

It appears that D&H Distributing is not involved, perhaps those cease and desist letters were warranted? In my estimation, Newegg has made every effort to  rectify the situation with customers who received the fakes. In the meantime, stay tuned for more updates. I expect Newegg and Intel to continue their investigations. Hopefully within the next several days more details will emerge as to how this happened.

-mdcomp

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Discussion
  1. I.M.O.G.
    IPEX Infotech's statement:

    http://www.overclockers.com/ipex-infotech-releases-statement-fake-newegg-i7-cpus/

    Ipex corroborates Newegg's statement, noting that the fake processors were provided by an unnamed supplier. I suspect that unnamed supplier will never be made public by IPEX.


    Just WOW!

    I wonder who buys directly from Intel??

    Seems Intel should be putting carton seals on shipments now, to guarantee shipped product.... If it arrives without the lock / seal, delivery can't happen...

    Thanks for that information...Very interesting...
    IPEX Infotech's statement:

    http://www.overclockers.com/ipex-infotech-releases-statement-fake-newegg-i7-cpus/

    Ipex corroborates Newegg's statement, noting that the fake processors were provided by an unnamed supplier. I suspect that unnamed supplier will never be made public by IPEX.
    I.M.O.G.
    Heh, I think thats a bit of extravagant conspiracy theorization... That's what got Kyle in trouble in the first place.

    /Kyle didn't assume tho, they were told by their secret source at Newegg that it was D&H. D&H is a supplier to newegg, and they likely do a much larger amount of business with Newegg processors than IPEX - D&H is an Authorized Intel Channel Partner, which means they are a much larger and well established organization. It isn't a stretch to guess that Kyle's contact wasn't even aware Newegg did business with IPEX, and made an inaccurate guess based on the fact that most of Newegg's processor supply may come from D&H.

    Having unofficial, undisclosed sources is common-place amongst popular "newsy" websites like , Anandtech, and Tom's Hardware... So that doesn't make me very suspicious.

    I need to stop, I'm being sucked into the speculation whirlwind. I'm more comfortable dealing with solid facts. :)


    I'm with you there... Just seems very strange how its panning out...

    I'm going to make one more comment, then I'm done..

    This is my problem... and I'm only continuing because it just does not make sense..

    There is always a paper trail..

    Somewhere at the shipping department @ source to Newegg's receiving department..

    Either The CPU's that left the source were genuine, and then replaced with fakes during the transfer to the egg... There are so many possibilities...

    Should have never happened, and the way Newegg handled it was spot on! +1 for awesome customer service!

    After the dust settles and the investigation is completed wonder who will take the blame for this one???

    That's it, I'm done... Thanks for letting me vent!
    Heh, I think thats a bit of extravagant conspiracy theorization... That's what got Kyle in trouble in the first place.

    /Kyle didn't assume tho, they were told by their secret source at Newegg that it was D&H. D&H is a supplier to newegg, and they likely do a much larger amount of business with Newegg processors than IPEX - D&H is an Authorized Intel Channel Partner, which means they are a much larger and well established organization. It isn't a stretch to guess that Kyle's contact wasn't even aware Newegg did business with IPEX, and made an inaccurate guess based on the fact that most of Newegg's processor supply may come from D&H.

    Having unofficial, undisclosed sources is common-place amongst popular "newsy" websites like , Anandtech, and Tom's Hardware... So that doesn't make me very suspicious.

    I need to stop, I'm being sucked into the speculation whirlwind. I'm more comfortable dealing with solid facts. :)
    I.M.O.G.
    I'm not sure I understand what you said Joe, but D&H had nothing to do with this. Their involvement was reported by Kyle Bennet at , which he blamed on misinformation from an undisclosed source of his at Newegg. D&H had no involvement at all, although they are one of Newegg's suppliers - none of the chips in this bad batch came from D&H. Ipex is who Newegg fingered for the faux pas, and Ipex also made a statement admitting they were the source, but also handed down blame on a supplier of theirs which they have not disclosed publically.


    That's my point... Why would assume that's who was involved when they said they're not after the fact? Just grabbing a supplier out of the air? could have picked a number of suppliers... Seems rather coincidental don't you think?? Undisclosed source? lol.. Sounds to me to be a huge cover-up... and to save face, and not hurt future D&H deals with other vendors, newegg said D&H was not involved... I'm sure that the "Undisclosed source", no longer works there and I'm sure he was handed a nice severance package to keep quite...

    This batch of fake 920's, were probably cheaper than normal, and the purchasing agent (probably the undisclosed source @ newegg) knew where he got them from who then spoke to his buddy at when the story broke, not thinking at the consequences... They were such a "good" deal, and would have made the GP (gross profit) higher...

    That's my take on this whole debacle...
    Joeteck
    Did they just grab D & (?) out thin air? Random guess? I find that hard to believe. D&? probably asked newegg to say that so they do not get hit with a scandal or bad press, which technically already happened. The damage is already done. Something this big should not be kept quite. This should be posted publicly. Just not fair for other distributors, hopefully history will not repeat itself...
    The problem here is very simple. Even if all those companies opened their books and inventory to the public (ain't gonna' happen - and not for the reasons you might think) then the conspiracy theorist's would just claim those were doctored as well. You can shout for 100% disclosure all you want but in the end that wouldn't be enough to satisfy, either.

    This whole series of speculations was apparently started by ONE guy making an assumption, which he passed on to someone else as fact. Or maybe the second guy decided to accept at as fact and run with the ball - who knows? Either way, passing on unconfirmed information in any situation is commonly known as "spreading gossip", "rumor mongering", and many other popular phrases, none of which are good ...
    I'm not sure I understand what you said Joe, but D&H had nothing to do with this. Their involvement was reported by Kyle Bennet at , which he blamed on misinformation from an undisclosed source of his at Newegg. D&H had no involvement at all, although they are one of Newegg's suppliers - none of the chips in this bad batch came from D&H. Ipex is who Newegg fingered for the faux pas, and Ipex also made a statement admitting they were the source, but also handed down blame on a supplier of theirs which they have not disclosed publically.
    Did they just grab D & (?) out thin air? Random guess? I find that hard to believe. D&? probably asked newegg to say that so they do not get hit with a scandal or bad press, which technically already happened. The damage is already done. Something this big should not be kept quite. This should be posted publicly. Just not fair for other distributors, hopefully history will not repeat itself...
    QuietIce


    Big Business doesn't necessarily imply good business and small business doesn't mean it's shady.

    That applies to wholesalers as well as retailers ...


    This is very true. Small business usually has a small customer base. They can't afford to lose customers, so usually deal above the board. Bigger business has the ability to weather a disruption in customers, and is thus more likely to deal below the board, or have shady stuff going on.
    Having watched this whole thing unfold has been quite a ride. It seems that, yes, D&H had every right to be PO'ed at the websites smearing their name across the internet and I can't really blame them for their actions. D&H is apparently big time to be part of Intel's main distribution network so of course their lawyers, instead of their PR men, would take the lead here. That's called "prudence". ;)

    And speculation of Newegg throwing IPEX to the wolves, so to speak, is just as crazy. There ARE liable laws out there and that would be a pretty blatant violation by a huge company (Newegg) - I just don't see that happening. If it were D&H that shipped those fakes I'm sure they'd take the blame, show where the problem arose, help with the investigation, and move on. Eventually the source of the fakes will come out and even if it's never made public the affected companies will be kept in the loop. There's no way IPEX will "take the fall" if they didn't do it (unless they get VERY well paid) and I'm sure Newegg knows this.

    In the end, regardless of my dislike of Intel, I hope they catch the SOBs that did this but I doubt the logistics system will change because of it. The criminals in this matter seemed to be quite aware of that system and how to fool it. After all, if the shipping crate was marked correctly and weighed correctly who would open it up until it gets to retailer? - and by then it's too late. :(

    I.M.O.G.
    Really interesting comment from forum user UhHuh, highlighting the fact that IPEX is not an authorized Intel Channel Partner:
    If "Authorized Intel Distributor" means the same as it does in many other industries that's just a term for companies who get bonuses and/or price reductions for keeping a high volume. Maybe CPU distribution works differently than other wholesale systems? - but I doubt it. That doesn't mean I'd give IPEX a sweeping clean bill of health (without proof), or that Newegg shouldn't be more careful where it gets it's product, but I wouldn't call it "gray market" by any stretch. There's a great tool store down the road from me, been in business for decades. They only sell quality stuff (Bosch, DeWalt, Porter Cable, etc.) and I'd bet none of their stuff comes from "Authorized Distributors" (too small a store) - but I wouldn't buy my power tools anywhere else! :)

    Big Business doesn't necessarily imply good business and small business doesn't mean it's shady.

    That applies to wholesalers as well as retailers ...
    Really interesting comment from forum user UhHuh, highlighting the fact that IPEX is not an authorized Intel Channel Partner:

    UhHuh
    It's maybe already been discussed here... but an entirely different angle on this is NewEgg getting these fake processors at all. As far as can be noted - IPEX is not an authorized Intel Channel Partner. That's putting it nicely.

    They (NewEgg) bought outside Intel authorized distribution and shipped the fakes they, I would assume, thought they'd saved a few bucks on. These were really bad, non-functional fakes at that... but other articles suggest that there are counterfeit Intel processors that do operate, but not to full spec, etc.

    these really bad fakes rolled out undetected.... With consideration to their Intel Partner status, I'd expect Intel is most certainly on them regarding the entire fiasco that is no less a result of them buying from this non-authorized/gray market supplier - it's a pretty short list Intel has in the tabs for who is authorized to distribute.

    http://www.intel.com/cd/channel/reseller/ASMO-NA/ENG/227304.htm