Market analysts are of the view that the Intel's recently announced chipset issue could hurt the personal computer (PC) shipments in the first quarter.

Intel (Nasdaq: INTC) said Monday it has discovered a design issue with its Cougar point chipset used with Sandy Bridge processors that would cost the chip maker $700 million and reduce the first quarter revenue by about $300 million.

Cougar Point is paired with Intel's new second generation Core processors called Sandy Bridge, which was launched at the consumer electronics show (CES) earlier this month.

California -based Intel expects to begin delivering the updated version of the chipset to customers in late February and expects full volume recovery in April.

With 8 million faulty Intel chipsets shipped to channel and Sandy Bridge ramp delayed, the chipset delay is likely to have implications for the broader PC supply chain, in our view, Barclays analyst Tim Luke said in a note to clients.

Analyst Chris Caso of Susquehanna Financial said: We believe the delay in full system availability of Sandy Bridge is likely to result in a downtick in 1Q PC builds, since we think original design manufacturers (ODMs) will be reluctant to take on inventory of older products ahead of Sandy Bridge availability.

Caso said that given that the Chinese New Year starts this week, the channel will not have time to react to Intel's announcement.

Thus, we believe it is highly likely that PC builds drop post-Chinese New Year, with the impact to the PC supply chain delayed until everyone is back from holiday, Caso said.

It seems PC systems using the new Sandy Bridge platform cannot ship in volume until April compared to an earlier expectation of late February. Chipsets to support dual core versions of Sandy Bridge are also expected to also be pushed out by a few weeks.

Jefferies analyst Adam Benjamin said though there is clearly going to be a lull in shipments in February, it is still unclear to what extent the original equipment manufacturers (OEMs) will continue to ship the affected chipsets.