Intel Cuts Prices, AMD Expected to Follow

Chipmaker Intel (INTC) lowered prices Sunday on three of its fastest microprocessors.

The move was expected after Intel launched its top of the line 1.7 gigahertz Pentium 4 last week and priced it at an unusually low $352. The price cuts involve slower Pentium 4 chips. Intel executives said last week during a meeting with analysts in New York that they are pricing the Pentium 4 aggressively so the company can ramp up production and move it into the "sweet spot" for demand.

Intel is in a dogfight with smaller competitor Advanced Micro Devices (AMD). Its market share decreased by about 4 percentage points during the first quarter as AMD picked up share. AMD has said that it intends to match Intel's price movements tick per tick, leading many on Wall Street to say that a price war is in the making for the two U.S. manufacturers of microprocessors. These chips are the brain in personal computers and have experienced the same decline in demand as PCs.

Intel lowered the price on the 1.5 gigahertz Pentium 4 by 51% to $256 from $519 effective April 29. It also cut the 1.4 gigahertz Pentium 4 to $193 from $375, a decline of 49%, and it trimmed the price on the 1.3 gigahertz Pentium 4 to $193 as well, 28% less than the $268 it cost before. Those chip prices were last lowered by a range of 11% to 20% on April 15.

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