Intel lost billions of dollars in a futile attempt to crack the smartphone processor market. Now a Brazilian phone seller says some of those poor selling mobile chips were defective, too.
Qbex Computadores filed a lawsuit against Intel in U.S. District court in California on Monday, charging that thousands of phones it sold containing Intel’s SoFIA chipset caught fire due to overheating from design defects. Qbex says 35,000 customers complained and 4,000 have filed lawsuits in Brazil. In the lawsuit, which seeks damages of at least $100 million, Qbex alleges that Intel committed fraud and misrepresented the quality of the SoFIA chips.
Intel said it wasn’t to blame for the phone problems. “We are reviewing the allegations in the complaint and we will investigate them thoroughly,” the company said in a statement. “However, we have no evidence to suggest that the overheating issues Qbex alleges were caused by our product.”
Qbex is a 14-year-old discount electronics seller that started off selling personal computers. In 2012, the company branched out into tablets and Intel-certified Ultrabook laptops. In 2015, it struck a deal with Intel to sell generic smartphones made in China with Intel’s low-end mobile chipset, SoFIA. The new phones had Qbex’s logo and an “Intel Inside” sticker.
Just over a year ago, Intel said it was killing SoFIA and related versions of its Atom line of processors, which were aimed at competing with ARM-based chips in the least expensive tablets and phones. The mobile Atom chip effort has been one of the biggest duds in the history of semiconductors as Intel spent billions designing and producing the chip, then billions more paying hardware makers to use them before failing to get any traction at all and eventually burying the whole project in 2015 inside of its shrinking but still highly profitable PC unit.
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According to the lawsuit, Intel (INTC) officials promised Qbex that “Intel was responsible for the design and quality of the products its (original design manufacturer) and system integrator partners manufactured and Intel had several supervising technicians working directly at their factories to ensure compliance with Intel’s standards and designs.”
Qbex also said its own testing revealed some of the Intel phones were operating at elevated temperatures compared to other phone models. But the third-party manufacturer told Qbex the higher temperature was acceptable and Intel assured the company that it would review the issue.
By the third quarter of 2016, complaints had skyrocketed and by December, Qbex decided to stop selling the phones.