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AMD undercuts Intel with lower chip prices

The processor maker slashes prices on its Athlon and K6-2 chips in its latest move to steal market share from rival Intel.

Advanced Micro Devices slashed prices on its Athlon and K6-2 chips in its latest move to steal market share from rival Intel.

The Sunnyvale, Calif.-based chipmaker cut

AMD chip cuts
Chip Old price New price
$849 $849
750-MHz $689 $489
700-MHz $519 $389
$167 $127
500-MHz $153 $93
Athlon prices late last night by roughly 25 percent, or about the same percentage that Intel cut Pentium III prices yesterday. After the cuts, Athlon chips remain roughly $20 to $50 less expensive than their Pentium III counterparts. The 800-MHz Athlon, for instance, dropped from $799 to $599 in volume quantities. By contrast, the 800-MHz Pentium III sells for $647.

The two companies are waged in a full-scale contest over PC processor market share. AMD executives have stated that the company's goal is to capture 30 percent of the market by the end of 2002. The company currently is edging toward the 20 percent mark. In the past, however, Intel has throttled these ambitions by dropping prices and driving AMD into the red.

One advantage that AMD holds for the moment is that supplies of its chips appear to be relatively healthy, according to sources, especially in comparison to Pentium IIIs. Chip dealers report that nearly every speed grade, except for the 850-MHz Athlon, remains easy to find. The fastest Pentium IIIs can be a tougher find, although Intel has stated that supplies are increasing.

An indication of the state of supply comes in the retail price of Athlons. Several dealers are selling Athlon chips at retail for less than the stated wholesale price.

An 800-MHz Athlon, for example, can be found at various dealers for $545, more than $50 less than the wholesale price. AMD processors can often be found for less than the company's stated price, except if shortages exist.

The difficulty with Athlon has been in finding chipsets, a crucial piece of silicon that allows the processor to speak to the rest of the computer. A shortage on these parts is expected to linger for another week, sources said.

Under the new pricing, the 850-MHz Athlon continues to sell for $849 in volume, while the 750-MHz drops from $689 to $489. The 700-MHz dropped from $519 to $389.

K6-2 processors, meanwhile, dropped in price by 10 to 39 percent. Among the price cuts, the 533-MHz K6-2 dropped from $167 to $127, while the 500-MHz fell from $153 to $93.