Merrill: Intel cuts chip prices, AMD to follow

Intel Corp. has cut the prices of its Pentium 4 processors in advance of the expected launch of a new 3.06GHz Pentium 4 processor Thursday, according to a research note distributed by Merrill Lynch & Co. Inc. Tuesday. Advanced Micro Devices Inc. (AMD) is expected to follow suit, the note said.

The approximate price of the new processor, Intel's first on the desktop to feature its hyperthreading technology, will be in about the mid-US$500 range, according to Merrill.

To bring slower processors in line with the new chip, the 2.8GHz Pentium 4 will fall in price from $508 to $401, and the 2.67GHz and 2.60GHz Pentium 4 processors will decline from $401 to $305. All prices are in 1,000-unit quantities.

Intel will also cut prices on its budget line of Celeron desktop processors, the note said. The 2.0GHz Celeron will fall from $103 to $83, the 1.8GHz from $83 to $69, the 1.7GHz from $69 to $54, and the 1.4GHz from $74 to $55, according to Merrill.

Chip manufacturers typically cut prices when a new, higher-performing chip enters the market, to align their product lines around the premium some users are willing to pay for the highest-performing processor. The prices of AMD's lower-end Athlon XP processors will also be cut sometime soon, specifically the Athlon XP 2100+, 1900+ and 1700+, according to Merrill.

Neither Intel or AMD had updated price lists available on their Web sites as of Tuesday morning, and representatives for both companies were not immediately available.

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