The chipmaker will debut its 1GHz and 1.1GHz desktop Celeron chips Friday, sources familiar with the company's plans said.
An Intel representative wouldn't comment on the timing of the new Celerons but said 1GHz and 1.1GHz are on schedule for release during the current quarter.
Resulting PCs should follow shortly from major manufacturers for prices around $900 for the 1.1GHz version.
Some PC makers have already begun advertising the PCs fitted with the new 1.1GHz Celeron.
For example, the 1.1GHz Celeron showed up on Dell Computer's Dimension PC Web site Tuesday. Customers can order a Dimension 2100 desktop with the 1.1GHz chip, 128MB of RAM and a 15-inch monitor for a price starting at $888.
Compaq Computer is also offering the 1.1GHz Celeron in configure-to-order versions of its Presario 5000 desktop via its Web site. There, a Presario 5000 with the 1.1GHz chip, 128MB of RAM and a 17-inch monitor lists for $829. When configured with Microsoft Office, the Dell machine lists for $1,038 and the Compaq for $958.
While the new Celerons can offer PC buyers more bang for the buck, they also serve Intel's larger goals for the end of the year. Those goals, outlined during the chipmaker's second-quarter earnings call, are to phase out the Pentium III and alter the desktop lineup to include only Pentium 4 and Celeron chips by the end of the year.
"The Pentium III will be 100-percent off the desktop by the end of the year," said Louis Burns, vice president and general manager of the Desktop Platforms Group at Intel.
No doubt, the chipmaker will use the new Celerons to help complete this transition by filling in the clock-speed gap between the current 950MHz Celeron and 1.3GHz Pentium 4 chips.
The Pentium III currently fills this divide, with versions ranging from 1GHz to 1.2GHz--but not for long, as Intel is expected to phase out 1GHz and 1.1GHz Pentium III chips and replace them with the new Celerons.
The new Celerons, analysts say, allow some breathing room between Intel's low-price Celeron and its premium brand, the Pentium 4. Previous high-end Celeron and Pentium III chips had been within a few hundred megahertz of each other.
Though a 1GHz chip is fast enough for most people, the newest Celerons will rank some 900MHz-1,000MHz behind the latest Pentium 4s.
Intel "has come under competitive pressure (from AMD's Duron) at the low end, and this allows it to respond without stomping on its premium brand," said Mike Feibus, a principal at Mercury Research.
Intel also offers a 1.2GHz Pentium III desktop chip based on its new 0.13-micron manufacturing technology, though it has not been widely adopted by PC makers.
Over time, Intel is also likely to replace that chip with its 1.2GHz Celeron. The new Celeron chip, planned for the fourth quarter of this year, will be Intel's first Celeron based on the 0.13-micron process, which allows chipmakers to print smaller features on a chip.
Moving Celeron to the 0.13-micron process will help increase the chip's clock speed and performance. Intel's 0.13-micron Tualatin core, the basis for current Pentium IIIs and future Celerons, offers a larger Level 2 cache memory and advanced multimedia instructions, among other features. But 0.13-micron chips are smaller than their predecessors, chips manufactured using a 0.18-micron process, so manufacturing costs are lower.
Though it is transitioning away from Pentium III for desktop PCs, Intel intends to keep the Pentium III-M , its mobile Pentium III processor, for about two more years.
The new Celeron chips also give Intel a slight edge on the competition. Advanced Micro Devices' 1GHz Duron was announced last week but won't be widely available until October, according to the company.
News.com's Michael Kanellos contributed to this report.