Intel set to slash processor prices

Price war with rival AMD sparks reductions

Intel is ready to cut the price of its full range of Pentium 4, Pentium III and Celeron processors in an attempt to heap pressure on rival vendor AMD.

The chip maker has long been involved in a price war with AMD, whose prices have been substantially cheaper for similarly clocked processors since becoming widely available.

With this in mind, Intel will this month cut the price of its Pentium 4 line by more than half. In this first round of price cuts, officially scheduled for this week, prices for the 1.5Ghz Pentium 4 will fall by up to 15 per cent. The 1.4Ghz will drop seven per cent and the 1.3Ghz will be reduced by five per cent.

The Pentium III and the company's low-end line of Celeron processors will also be made between five and 30 per cent cheaper, with the largest price cuts on the higher-clocked chips.

Intel is conscious that it has signed an exclusive deal to bundle narrow-bandwidth Rambus memory with its processors. Rambus, which is experiencing supply problems, currently sells at more than three times the price of AMD's chosen memory type, double data rate (DDR).

DDR is now flooding into the market, prompted by last week's announcements by memory vendors Kingston and Micron that they will be ramping up the production of DDR and slashing prices.

Intel will therefore hold a second round of processor price cuts on 29 April. The cuts will coincide with the launch of the Pentium 4 1.7Ghz chip and will see 1.5Ghz, 1.4Ghz and 1.3Ghz versions plunge by 51, 48 and 27 per cent respectively.

System integrators and dealers can also expect new pricing this month for AMD's Athlon range. Effective from this week, original equipment manufacturer prices for a 1.33Ghz Athlon will fall to $220 (£153), with incremental changes to the rest of the range. Duron prices remain unchanged.