Intel slashes chip prices, boosting pressure on AMD

Computerworld - Intel Corp. is slashing the price of some of its processors up to 50%, a slap in the face to rival Advanced Micro Devices Inc., long known as the low-price alternative in the chip market.

Intel announced on its Web site yesterday that it had cut the price of about a dozen processors. Patrick Ward, a spokesman for Intel, noted that most of the processors on the price-cut list were built on 65 nanometer technology, which Intel is phasing out in favor of its new 45nm chips. It's akin to car dealers cutting the prices on last year's models to make room for the latest ones.

"We're transitioning from 65nm to 45nm," said Ward. "We're in the process of refreshing our line. If you see a 65nm [chip], it's older technology and we're moving on from it."

According to Intel's new price list, its Q6700 Core 2 Quad processor price decreased from $530 to $266 for a shipment of 1,000 chips -- a 50% change. The Intel Xeon X3230 also had its price slashed in half, dropping from $530 to $266.

The company also noted that the price of 1,000 Core 2 Duo E6850 chips was cut from $266 to $183, a 31% drop, while the Intel Celeron 430 dipped 23%, to $34. And the price of an Intel Xeon 3085 shipment was cut from $266 to $188.

Dan Olds, an analyst at Gabriel Consulting Group Inc., said it's fairly common for Intel to trim some chip prices, but he's surprised that the company would make such big cuts on so many chips at once.

"This really keeps up the pressure on AMD," he added. "Intel blankets the market from high end to low end, with multiple choices at almost every price point -- each competitive with AMD on either performance or price or both. They're making sure they have a compelling price and/or performance value proposition in every segment where they compete with AMD. In short, it isn't getting any easier to compete with Intel."

AMD said last week that it's on track to ship its first 45nm chips in volume in the fourth quarter. If that is when AMD enters the 45nm race, the company will be about a year behind Intel, which shipped its first 45nm Penryn chip this past November.

Read more about Processors in Computerworld's Processors Topic Center.