Intel chip price cuts expected soon

Intel Corp. is widely expected to step up its speed and price war with microprocessor rival Advanced Micro Devices Inc. Monday when it provides pricing for its fastest microprocessor, the 2-GHz Pentium 4. And some analysts are predicting that the company will unveil expected price cuts for some of its microprocessors this weekend, before the start of next week's Intel Developer Forum in San Jose.

"The general feeling is that Intel will introduce price cuts as soon as possible," said Framingham, Mass-based IDC analyst Andrew Brown. "They'd drop prices in response to AMD but also to help stimulate demand as well, to help give a fourth-quarter push. It is a standard sort of tactic from Intel."

Brown said he expects Intel to name the price of its 2-GHz Pentium 4 Monday, when the chip maker is also scheduled to preview the microprocessor along with its other new desktop processor, the 1.9-GHz Pentium 4. Intel's semiannual developer's forum is scheduled for next Monday through Thursday.

Since Sunnyvale, Calif.-based AMD announced this week that it's slashing prices on all of its mobile chips (see story), as well as its Duron desktop line, speculation has been rife among analysts and industry pundits over when Intel will announce cut in its microprocessor prices and just how deep those cuts will be.

"When AMD decides to drop their prices, Intel is most likely to follow, though Intel also wants to clear their excess stock," Brown said.

Intel, which hasn't cut prices since July 15, declined to give any indication of its future plans. "Right now, there is only a lot of speculation, and we don't comment on speculation," said Intel's U.K. spokesman Graham Palmer.

"There have been rumors that the cuts will be up to 50% and that they could come as soon as this weekend, but that seems a bit drastic to me. Certainly, the reductions will be significant, though. I would think there will be declines of between 20% to 30% and that they will come in the beginning of September," Brown said.

He was referring in part to a report last month by financial analyst Dan Niles from New York-based Lehman Brothers Holdings Inc. that forecast that Intel would cut the prices of its Pentium 4 line by up to 54% by the end of this month (see story). Niles also said he expects Intel to cut the price of 2-GHz Pentium 4 microprocessor by more than 50%, a figure Brown said he finds somewhat dubious.

"Intel hasn't even announced the price for the Pentium 4, let alone if they are going to cut that price. But one thing is for sure: Intel is going to have to be competitive in its pricing, and the company is definitely going to attempt to push demand for the Pentium 4, especially going into the Christmas season," Brown said.

He declined to speculate on actual pricing.

A report published today in The Wall Street Journal quoted analysts predicting that Intel will charge $560 for the 2-GHz Pentium 4 and $375 for the 1.9-GHz version.

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