The Santa Clara, Calif.-based chipmaker is coming out with a 1.3-GHz version of the Pentium 4 in the first quarter that will allow PC manufacturers to introduce PCs containing the chip for less than $1,600, sources said. A souped-up version of the Celeron running at 800 MHz will also be introduced.
Intel's diversified chip line
Cary Snyder, analyst, MicroDesign Resources
New versions of the XScale chip will make their debut as well.
The early-year chip onslaught follows a difficult year for Intel. In the first half, Intel lost sales because of a dire processor shortage. And in the second half, dropping PC demand forced the company to scale back earnings expectations twice. Intel also had to recall a number of products.
For 2001, company executives say they are intent on avoiding further shortages and beefing up quality control.
Aiming at AMD
"We are going back to the 100 percent-everywhere testing," said Jeff McCrea, marketing director for Intel's desktop products group. Regarding a 1.13-GHz Pentium III that was recalled, he said, "In a little bit of our haste, we didn't go through all of our traditional product validation."
The 1.3-GHz chip is being put in the lineup to fill a price and performance gap between Intel's aging Pentium III 1-GHz chip and its brand-new, high-end Pentium 4.
Prices of PCs with Pentium 4 chips start around $1,900 to $2,100. PCs with 1-GHz Pentium III chips, however, cost about $1,400 to $1,500.
The 1.3-GHz chip would appear in PCs priced between $1,500 and $1,700, a market segment that is becoming the home turf of Advanced Micro Devices. PCs containing a 1.1-GHz Athlon chip, for example, start around $1,800, with 1.2-GHz chips selling for slightly more.
AMD executives at last month's Comdex trade show in Las Vegas discussed how the company plans to exploit the gap between Pentium III and Pentium 4 prices.
Intel executives declined to comment on unannounced products but broadly hinted that a cheaper Pentium 4 was coming.
"You can expect to see us expand the (Pentium 4) product line throughout the year," McCrea said. "It might make sense to expand (Pentium 4) both up and down."
Slowing demand for PCs has freed up manufacturing capacity so that Intel can afford to dedicate factory space to the chip, said Mike Feibus, an analyst at Mercury Research.
"If you look back a year ago, Intel's thought at the time was that P4 was big and expensive to make, so it would fill the gap with Pentium III," Feibus said. "Now, Intel can do (1.3 GHz) with the Pentium 4 now that it has the manufacturing capacity, and there's also capacity for RDRAM" (Rambus dynamic random access memory).
The push to get Pentium 4 more into the mainstream of computing, however, could be hampered a bit by Rambus memory. Although it has come down in price, Rambus memory is still more expensive than conventional memory; it is also the only type of memory that can be used in Pentium 4 computers.
Toward the third quarter of 2001, Intel will release a chipset code-named Brookdale that will let PC makers pair Pentium 4 computers with regular memory, called synchronous dynamic RAM, or SDRAM. In early 2002, Intel will come out with chipsets that will allow for the incorporation of double-data rate (DDR) SDRAM, a faster form of standard memory, McCrea said.
In addition to the new Pentium 4 chip, Intel plans to ship a number of new processors in the new year, ranging from faster Celerons to new XScale chips.
The chipmaker is expected to launch an 800-MHz desktop Celeron chip in early January. Along with slightly higher clock speed, the new chip will be the first desktop Celeron to offer a 100-MHz front-side bus, a crucial data path between the PC and the rest of the computer. Current Celerons have an older, slower 66-MHz bus.
Intel also will offer additional performance for handheld devices, with XScale chips that will run at 400 MHz and 600 MHz. The additional speed will allow handhelds and handsets to run more complex applications, such as speech recognition, and process more data at a faster rate, said Cary Snyder, an analyst at MicroDesign Resources.
The 1.13-GHz Pentium III chip is unlikely to be launched until the second quarter of next year. AMD will counter Intel with a 1.33-GHz Athlon chip, sporting a 266-MHz front-side bus. That chip is due in the first quarter, according to the chipmaker.
News.com's Michael Kanellos contributed to this report.