Chip wars prompt price cuts

From...

By Joris Evers and Douglas F. Gray

(IDG) -- Chip costs are falling amid a flurry of Intel product announcements this week, with Advanced Micro Devices slashing prices on its Athlon CPU to compete with Intel's own price cuts and the new 2GHz Pentium 4, unveiled Monday.

AMD's price cuts on all of its Athlon desktop chips for the second time in as many weeks. With this round, AMD's current top processor, the 1.4GHz Athlon, is priced at $3 less than Intel's 1.4GHz Pentium 4.

AMD has slashed the prices of both versions of its 1.4GHz from $253 to $130, and its 1.3GHz and 1.33GHz chips drop from $230 to $125. Both versions of its 1.2GHz chip also fell from $199 to $120, and anything with a slower clock speed than 1.2GHz is reduced in price to $115.

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The prices of the 1.13GHz and 1.1GHz processors are reduced from $179, while both versions of AMD's 1GHz processor were reduced from $160, according the company. Chip prices are in quantities of 1000 units, a standard measurement of chip sales.

Selling Off Older CPUs

Intel, with the launch of both 2GHz and 1.9GHz CPUs, has cut the prices on some of its chips by up to 54 percent.

Intel's 2GHz P4 is replacing the 1.8GHz version as Intel's fastest chip and will be sold for the same price wholesale: $562 each in 1000-unit quantities. The 1.9GHz P4 is priced at $375, a slight price increase for Intel's second fastest chip. The company's former number-two chip was the 1.7GHz Pentium 4, which cost $352.

To make room for the 2GHz processor in the top slot, Intel has dropped the price of its previous highest-speed chip, the 1.8GHz P4, by 56 percent, from $562 to $256, according to the company. Intel also cut the prices of both its 1.7GHz and 1.6GHz chips by 45 percent -- the 1.7GHz chip now costs $193 and the 1.6GHz, $163.

Intel slashed the price of its 1.5GHz Pentium 4 by 48 percent to $133. Wrapping up the cuts across the entire Pentium 4 family, Intel also reduced the prices of its 1.4GHz and 1.3GHz Pentium 4 processors by 31 percent, to matching prices of $133, according to the Web site. Matching the prices of the slowest processors in a family is a standard practice in the industry to kill off the slower speeds.

Accessory Announcements

In addition to slashing the prices of its Pentium 4 line to make room for the new chips, Intel cut the prices of its Xeon processor family, Pentium III Processor-S family, Celeron desktop processors, and its three fastest Pentium III desktop processors.

Its Xeon family, for workstations and servers, saw price cuts across all three speeds, dropping up to 41 percent.

The company also cut the price of its entire line of low-cost Celeron desktop processors to $64. That meant a 28-percent price cut for the 900MHz Celeron, and only a 7-percent cut for the 766MHz processor -- but gives all the Celeron chips matching prices.

Intel has other announcements in store for its developer forum, occurring this week in San Jose. The company is announcing two desktop boards and previewing its upcoming low-cost 845 chipset. The SDRAM-based 845 platform should bring down prices of PCs even further, according to Intel.