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Intel, AMD lower prices with chip introduction

Intel and AMD cut processor prices up to 24 percent with the introduction of 15 new chips from Intel, a combination of events that will likely lead to cheaper high-end PCs.

Intel and AMD cut processor prices up to 24 percent with the introduction of 15 new chips from Intel, a combination of events that will likely lead to cheaper high-end PCs for the holidays.

The cuts, which coincided with the release of the "Coppermine" Pentium IIIs from Intel, largely took place at the performance end of the processor segment. The new processors, which contain architectural enhancements, run at various speeds from 450 MHz to 733 MHz and are aimed at more deluxe PCs and notebooks.

The 733-MHz and 700-MHz Coppermine sell for $776 and $754, respectively, in volume quantities. As a result, AMD'sfastest Athlon, at 700-MHz version, dropped 18 percent from $849 to $699 while the 650 MHz dropped 16 percent to $519 Although memory and component shortages are pressuring PC prices upward, processor cuts could neutralize that and send prices down, analysts say.

Intel and AMD are locked in a performance and price battle at the high end of the desktop range. Earlier this year, AMD took the performance crown away from Intel with the release of its Athlon processor. The company's lead was expanded with the introduction earlier this month with a 700-MHz Athlon.

Coppermine, however, appears to have eclipsed that gap. Benchmark test results published by MicroDesign Resources yesterday stated that the 733-MHz Pentium III outperformed the 700-MHz Athlon in both floating-point and integer tests, two important parameters. The lead, however, could change again soon, analysts at the company cautioned.

"The game is far from over, but Coppermine puts AMD back on the defensive," wrote Linley Gwennap, publisher of the Microprocessor Report.

Along with challenging AMD on performance, Intel is also upping the stakes in total chip output. Intel executives at the introduction of the Coppermine processors in San Jose, California, yesterday several times mentioned to Intel's ability to manufacture lots of chips. The new Coppermines are already being made in four factories--a fifth will begin pumping out the chips by the first quarter.

"You have to be able to produce these in multimillions of units," said Paul Otellini, general manager of the Intel Architecture Business Group,

AMD has two factories. One, however, just opened and is not expected to churn substantial revenues, according to AMD, until the second quarter of next year.

As for cost, Intel also rolled out new, cheaper packaging on certain 500-MHz and 550-MHz Coppermine Pentium IIIs. The new package eschews the plastic case featured on most Pentium IIIs and IIs and is more similar to the package seen on Celeron chips. Eventually, the cheaper packaging will extend to the entire line.

"Packaging is the single biggest factor in reducing costs," Otellini said. AMD will no doubt attempt to reduce costs as well, Gwennap and others have noted.

Other new prices are as follows:

The 667, 650, and 600-MHz Coppermine Pentium IIIs came out at $655, $583, and $455. The older 600-MHz Pentium III dropped 24 percent from $615 to $465. The 550-MHz and 500-MHz Coppermines in the new, cost-effective packages came out at $368 and $239. Nominal cuts were made to earlier Pentium III and Pentium II chips.

Celeron processors were cut by $5 to $10 dollars. The family now ranges in speed from 500 Mhz to 400 MHz and sells, in volume, for between $143 and $64.

For AMD, the 600-MHz and 550-MHz Athlons both dropped 7 percent, from $449 to $419 and $304 to $279, respectively. The 500-MHz Athlon remained at $209.

Pentium III mobile chips, which are also based around the Coppermine design, came out yesterday. The chips range in speed from 500-MHz to 400-MHz and cost between $530 and $348. AMD has not yet released Athlon for mobile systems.

All prices relate to volume quantity purchases. Actual retail price will vary.