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Chip prices fall at AMD

Bargains abound for certain AMD models, but the nature of the cuts suggests that a price war is not in the offing, an analyst says.

Tom Krazit Former Staff writer, CNET News
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Tom Krazit
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Advanced Micro Devices cut prices over the weekend on some dual-core desktop processors and Turion mobile processors, bringing them more in line with the prices of some Intel chips.

It's now cheaper to buy AMD's top five Athlon 64 X2 processors as well as the company's Turion ML notebook processors, if you're shopping in quantities of 1,000 processors. The Athlon 64 X2 4800+ received the biggest discount among the desktop chips, moving from $803 to $643 over the weekend. The Turion ML-44 also received a hefty cut, down to $354 on Monday from $525 last week.

The list prices are only a rough guide, as PC vendors typically negotiate their own prices, and enthusiasts pay different prices for boxed processors.

An AMD representative confirmed the pricing changes, but declined to comment on the reasons behind the moves. "We schedule price moves as required by the market," the representative said.

The price discounts come one week after Intel and AMD painted two very different pictures of their fourth-quarter performance. AMD reported strong sales of its processors across all segments, while Intel said poor demand for desktop PCs, coupled with inventory problems, were to blame for a revenue shortfall.

Coming off Intel's news, some analysts had expected the stirrings of a price war in the processor market. AMD's cuts did not reach its low-end desktop processors, suggesting that pricing pressure only exists in the mainstream part of the market for now, Hans Mosesmann, an analyst with Moors & Cabot, wrote in a research note published Monday.

Chip companies tend to assign fixed pricing levels to their products and then move older products down the ladder as more powerful ones are introduced. AMD did not launch any new chips on Monday, but it is expected to unveil dual-core Turion processors during the first half of 2006, and Mosesmann had thought AMD was to introduce the Athlon 64 X2 5000+ on Monday.

AMD is also still charging a premium for its dual-core chips, compared with its single-core models. When Intel introduced its Pentium D processors last May and its Core Duo chips earlier this month, it priced those chips in line with its most powerful single-core models, essentially giving buyers an extra processor core at no charge.

AMD chose to charge more for the dual-core chips when it debuted them last May, arguing that since overall performance was going up dramatically, the chips were more valuable. But those prices have come down quite a bit since they were first introduced to become more competitive with Intel's pricing, if still a little more expensive, Mosesmann said.