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 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.
Following this release is a copy of an advertisement that will appear
starting on December 21 in major newspapers in North America.

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

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