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. (AMD) by providing pricing for its fastest microprocessor, the 2GHz Pentium 4, Monday. Some analysts are also predicting that the company will unveil expected price cuts for some of its microprocessors over the weekend, before the start of next week's Intel Developer Forum (IDF) in San Jose, California.

"The general feeling is that Intel will introduce price cuts as soon as possible. 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," said International Data Corp. (IDC) analyst Andrew Brown.

Brown expects Intel to give the price of its 2GHz Pentium 4 Monday, when the chip maker is also scheduled to preview its faster microprocessor along with its other new desktop processor, the 1.9GHz Pentium 4. Intel's semiannual developer's forum is scheduled for next Monday through Thursday. Since AMD announced Monday of this week that it is slashing prices on all its mobile chips, as well as its Duron desktop line, speculation has been rife among analysts and industry pundits over when Intel will announce its cut in 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 has not 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 percent, 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 percent to 30 percent and that they will come in the beginning of September," IDC's Brown said.

Brown was referring in part to a report by financial analyst Dan Niles from Lehman Brothers Holdings Inc. made public last month, in which he forecast that Intel will cut the prices of its Pentium 4 line by up to 54 percent by the end of this month. Niles also said that he expects Intel to cut the price of its fastest microprocessor by more than 50 percent, a figure Brown finds to be 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. Brown declined to publicly speculate on actual numbers in terms of pricing.

A report published Wednesday in The Wall Street Journal newspaper quoted analysts as predicting Intel will charge US$560 for the 2GHz Pentium 4, and $375 for the 1.9GHz version. Meanwhile, the Web site Hardware Extreme last month quoted its sources as saying that Intel will soon cut the price of the 2GHz Pentium from $562 by 29 percent to $401, while cutting the price of the 1.9GHz Pentium 4 from $375 to $274.

Furthermore, the report said the price of Intel's 1.8GHz Pentium 4 would be cut to $256 (down from $562) next week, while the 1.5GHz Pentium 4 will be reduced in price by 48 percent to $133, from $256.

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Laura Rohde

PC World
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