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Intel slices desktop chip prices

The chip giant shaves prices of several desktop models by up to 19 percent over the weekend as the slowdown in PC sales drags on.

Intel shaved prices on several desktop chips by up to 19 percent over the weekend as the slowdown in PC sales drags on.

The 1GHz Pentium III dropped 10 percent, from $268 to $241, while the 933MHz Pentium III sank 7 percent, from $241 to $225. The most substantial cut came on the 800MHz Celeron, which dropped 19 percent from $138 to $112. The 766MHz version of the Celeron went from $112 to $103, an 8 percent drop.

Nominal cuts were made on the Pentium 4 line. The 1.5GHz Pentium 4, for instance, went from $644 to $637, a drop of 1 percent. The 1.4GHz version of the chip dropped 4 percent, from $440 to $423. The 1.3GHz version dropped 1 percent, from $336 to $332.

The prices listed apply to wholesale purchases of chips in quantities of 1,000. Retail prices are generally slightly higher, although the actual differences vary.

The Santa Clara, Calif.-based chipmaker used to cut chip prices at the end of each quarter. But by 1998, the diversification of the product line and increasing competition led to more frequent discounts. Now, the company makes at least one price cut per month.

Some months see bigger cuts than others. In January, the company whacked Pentium 4 prices more than 20 percent and cut mobile chips by up to 30 percent to amid a glut of PC components.

A price cut on notebook chips could occur in the middle of the month to dovetail with the release of the 1GHz Pentium III for notebooks March 19. Desktops will likely see a major cut in May when the 1.7GHz Pentium 4 emerges.

The price reductions come amid a slowdown in PC buying. In 2000, retail PC sales declined for the first time since the industry began keeping records. They have not improved since. A creaky economy has also kept a lid on corporate computer purchases.

Although the slowdown in buying has been most pronounced in the United States, repercussions are occurring worldwide.

In Japan, PC sales dropped in the second week of February, compared with the same period a year ago, according to the Nikkei news service. The drop marks the first year-to-year decline in Japan since March 1998.

Intel, along with nearly every major hardware manufacturer, has warned that earnings and revenue will be lower than expected this quarter. Some executives and analysts have predicted an uptick in the second half of the year, but many say the outlook is difficult to gauge.

Despite the slowdown, some chips have been difficult to find recently. The 1GHz version of the Pentium III and the 1GHz version of Advanced Micro Devices' Athlon chips have been in fairly tight supply since January, said an executive at one motherboard company.