The cuts are expected to lead to a drop in prices for notebooks in time for the back-to-school season. The price cuts are aimed to clear inventory, making room for new Celeron notebooks running at 433-MHz and 466-MHz. Those new machines are expected to arrive after the chips are released next week, sources said.
New Pentium III notebooks are expected to be released toward the end of the month, following the unveiling of the "Coppermine" generation of Pentium III chips.
The price cuts took effect on Sunday. Discounts on notebooks are expected to follow, but how deep prices will be cut is difficult to gauge. A shortage of LCD monitors has crimped notebook supplies and recently has kept prices fairly stable. Some manufacturers, including Dell Computer, have faced an order backlog as a result of the monitor shortage.
The discounts on Intel's notebook chips are relatively steep. The 400-MHz Celeron processor, for instance, dropped approximately 43 percent, from $187 to $106 in volume quantities, while the 400-MHz Pentium II slid 32 percent, from $530 to $358 in volume quantities.
Most of the major PC makers, including IBM and Compaq Computer, are expected to release 433-MHz and 466-MHz Celeron notebooks in conjunction with the release of the faster chips.
Although Celeron is often associated with consumer notebooks, sources indicated that the chip is making deeper inroads as a notebook business chip. Some of the 433-MHz and 466-MHz Celeron systems, for instance, are geared for the business consumer and are expected to cost around $2,000.
The 433-MHz Celeron will sell for $160 in volume quantities, sources said, while the 466-MHz is expected to cost over $200.
The first Pentium III notebook chips, based on the Coppermine design, will run at 500-MHz or faster. Unlike standard Pentium III chips, Coppermine Pentium IIIs contain integrated cache memory, which speeds performance.
Earlier, Intel delayed Coppermine for desktops and notebooks until late October, but last week chief executive Craig Barrett said that the first Coppermine desktop chips would arrive in September. Barrett also promised increased chip speeds, saying the desktop versions would debut at 700-MHz, rather than the expected 600-MHz.
While Barrett did not specifically accelerate the release of notebook Pentium IIIs, the compressed release for the desktop version of Coppermine indicates that Intel may be ready to unveil the new notebook version sooner than anticipated.
Not to be outdone, chip rival AMD will follow in the near future with new notebook processors, a company spokeswoman said. Currently, AMD's mobile K6-2 chip runs at 400-MHz while the K6-III for notebooks runs at 380-MHz.
Intel's discounts are as follows:
The 366-MHz Pentium II fell from $316 to $187, a 41 percent discount, while the 333-MHz Pentium II fell from $187 to $161, a 14 percent discount.
The 366-MHz Celeron chip dropped 41 percent, from $144 to $85, while the 333-MHz version slid 30 percent, from $106 to $74. The 300-MHz Celeron chip dropped 11 percent, from $85 to $74.
All prices quotes are for purchases of wholesale, volume quantities. Actual retail prices of notebook chips will likely be higher.