Chip manufacturers use price cuts mainly as a tool to establish new products in the market or to move customers up to higher clock speeds. During tough economic times, such as 2001, they also lower prices to help spur demand.
During most of last year, Intel and AMD brought high-end chip prices down quickly. However, their last high-end chiptook place last October.
Intel's newest reductions should help entrench the company's flagship Pentium 4 processor in the heart of the desktop PC market. The cuts seek to move the 1.6GHz version into place as the default Pentium 4 offered in base configurations, since PC makers can buy the chip, with its extra megahertz, for the same price as some slower siblings.
AMD's more extensive price cuts, meanwhile, serve to align its chips with market conditions, the company said.
At one point last year, Intel rolled several scheduled price cuts into one giant Pentium 4 reduction, athat trimmed as much as 50 percent from the price of some high-end Pentium 4s. This week's cuts--up to 18 percent for midrange and lower-end Pentium 4s--were much smaller.
This time, Intel's cuts take care of lower-priced systems. The largest change lowers the price of the 1.6GHz Pentium 4 by 18 percent, from $163 to $133. The 1.4GHz and 1.5GHz Pentium 4 also cost $133. The 1.6GHz chip now also costs less than all of Intel's desktop Pentium III processors up to 1.2GHz.
Intel also trimmed the prices of its Pentium 4 chips at 1.7GHz, 1.8GHz and 1.9GHz by between 12 percent and 16 percent. The new prices for those chips are $163, $193 and $214, respectively. The 1.7GHz chip debuted last April at a lower than expected $352, sparking Intel's price war with AMD.
AMD's latest round of cuts, up to 19 percent for the Athlon XP 1600+, was more extensive than its last price reduction in October. A company spokesman said the new prices reflect current market conditions and adjust for things such as new products.
The company dropped the 1900+ chip by 14 percent, from $269 to $231; the 1800+ by 16 percent, from $223 to $188; and the 1700+ by 17 percent, from $190 to $157. The largest price move, 19 percent, saw AMD lop the 1600+ chip from $160 to $130.
AMD also cut prices of its Duron chip by up to 17 percent. It dropped the price of the new 1.3GHz Duron by 13 percent from $118 to $103. The 1.2GHz Duron was pared by 14 percent from $103 to $89, with the 17 percent cut coming on the 1.1GHz, which dropped from $89 to $74. The 1GHz Duron dropped by 7 percent to $69.
Meanwhile, Intel followed up its Pentium 4 actions with price reductions for some high-end desktop Celerons and a handful of Pentium III-S and Xeon chips.
Intel's largest Celeron cut lopped 14 percent from the price of its 1.2GHz chip, which fell from $103 to $89. Meanwhile, the 1.3GHz Celeron was reduced by 13 percent to $103, followed by an 11 percent drop for the 1.1GHz chip, which is now priced at $79. Intel lowered the price of its 1GHz Celeron by 7 percent. It is now priced at $69.
While the chipmakers advertise their list prices, which are for chips purchased in 1,000-unit lots, large customers receive better prices for buying larger amounts of chips. As a result, street prices can vary widely depending on the prices that distributors pay for the chips they sell.
A new mobile chip to boot
AMD also extended its Athlon model-number nomenclature, with the Athlon XP chip line last October, with a new mobile Athlon 4 1500+ chip.
The new processor runs at 1.3GHz, making it the fastest-available mobile processor for notebook PCs. But clock speed isn't everything, according to AMD. Hence, the chipmaker launched the new naming scheme to show that the Athlon chip, when measured at a given megahertz, offers greater overall performance than its clock speed rating suggests.
The new 1500+ mobile chip, which carries a list price of $525, will be available in Compaq Computer's Presario 700 notebook series.