Intel slashes prices up to 54 per cent on mobile chips

Intel quietly axed prices last week on its mobile Pentium III and mobile Celeron processors, a move one analyst said could result in cheaper notebooks for users.

In an unusually deep round of cuts, the chip vendor slashed the price of its 500MHz Mobile Pentium III processor by 54 per cent, from $US530 to $245, according to information on Intel's Web site. Prices of 450MHz and 400MHz versions of the chip also fell sharply, by as much as 46 per cent.

Also cut in price were mobile Celerons, which are targeted at low-cost notebooks. The 466MHz version dropped 54 per cent in price, from $209 to $96. The 433MHz and 400MHz versions also dropped sharply, by 53 per cent and 34 per cent respectively.

The price cuts could translate into savings of as much as $100 on the price of a typical Pentium III notebook PC, said Dean McCarron, principal analyst with Mercury Research. Celeron notebook prices may also come down slightly, though probably not by as much.

The price cuts, which took effect January 16 and apply to chips bought in 1000-unit quantities, are due to a variety of factors, analysts and Intel officials said.

For starters, they make way for new mobile processors featuring Intel's SpeedStep technology. Unveiled Tuesday, SpeedStep allows a notebook to run at two performance speeds depending on whether it is plugged into a mains supply or running on batteries. Intel typically lowers prices on its current high-end processors to make way for new, more powerful entrants.

As for the Celerons, Intel has been losing share in the retail chip market for low-cost notebook computers to arch-rival Advanced Micro Devices (AMD), and the steep price cuts are designed to help it recover some of that share, according to Kevin Krewell, senior analyst with research firm MicroDesign Resources.

"They moved all the mobile Celeron pricing to below $100 to compete with the AMD K6-II, which is selling very well in the value mobile space," Krewell said.

The Celeron cuts also make way for Intel to introduce faster versions of that product later this quarter, Krewell said. Those mobile Celerons will be based on a more advanced, 0.18-micron manufacturing process and will likely start at speeds of 500MHz, he said. Intel's mobile Celeron family currently etops out at 466MHz.

An Intel spokesman declined to comment on whether the company is losing business to AMD for low-cost notebooks. He did confirm that Intel has said it plans to release faster Celeron processors based on the new 0.18-micron manufacturing process by mid-year.

Part of the reason the price cuts are so steep is that Intel hasn't cut prices on its mobile processors since September of last year, said Intel spokesman Seth Walker. At that time, mobile Celeron prices dropped by as high much as 43 per cent and mobile Pentium II prices fell by up to 32 per cent, he said.

"With desktop prices you tend to see several price moves throughout the year with slight decreases. In mobile as well as server (markets), you tend to get more time between price moves, but then those price moves are steeper," Walker said.

Part of the reason for that time line is that design cycles - or the time it takes manufacturers to bring new systems to market - tend to be longer for notebooks than for desktop PCs. Seasonal factors and inventory levels also influence when and how steeply Intel cuts its processor prices, Walker noted.

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James Niccolai

PC World

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