Intel's Pentium processor began reaching computer makers in volume, offering roughly five times the performance of its 486 predecessor and cementing Intel's dominance of the PC market. Months later, the chip would become notorious for the 'FDIV bug,' a rare floating-point division error that cost Intel nearly half a billion dollars in replacement costs.
The Pentium represented Intel's departure from purely numerical chip names (the 386, the 486) toward a trademarkable brand name, partly because rivals like AMD were cloning the numbered designs and Intel wanted legal protection. The chip packed 3.1 million transistors, could execute two instructions per clock cycle, and powered the wave of multimedia PCs that defined mid-1990s computing.
Later that year, mathematician Thomas Nicely discovered that certain rare division operations produced slightly incorrect results due to an error in the chip's lookup table for floating-point division. Intel initially downplayed the flaw, estimating it would affect an average user once every 27,000 years -- a defense that only inflamed public anger once the story went viral on early internet forums.
Facing a consumer backlash and an IBM decision to halt Pentium-based shipments, Intel reversed course in December 1994 and offered no-questions-asked replacements, ultimately taking a $475 million charge. The episode became a landmark case study in corporate crisis management and an early demonstration of how the internet could amplify a technical defect into a full-blown reputational crisis.
Key people: Andrew Grove, Thomas Nicely