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Pentium price cuts at hand

Intel is expected to lower the prices of its Pentium 4 processors late next month, sources say, in the first of two moves scheduled for this quarter.

Intel will pull out its scissors next month to make the first of two price cuts scheduled for this quarter, sources say.

The chipmaker has planned the price adjustment for desktop Pentium 4 chips for late February, according to sources. It will be the first such cut for these chips since November.

The price cuts for the desktop chips, including the top-of-the-line 3.06GHz Pentium 4, will range from about $25 to $50, sources said.

Intel regularly cuts its prices as part of a predetermined plan in which it brings out faster processors and moves its existing chips down in price. The company typically notifies its customers of intended price moves well in advance. In this case, the price move will help make way for a 3.2GHz desktop Pentium 4 chip due out later in the quarter, sources said.

Intel, which lowered its notebook Pentium 4 prices earlier this month, uses its price cuts and the introduction of faster clock speeds to motivate PC makers to upgrade to new processors. The moves also inspires consumers and businesses to buy new PCs and helps Intel fend off competition from rival Advanced Micro Devices.

Intel representatives declined to comment on any potential price cuts.

Intel took a short hiatus from price cuts at the end of 2002, after releasing its 3.06GHz Pentium 4 chip, and after several rapid-fire cuts in 2001 and early 2002.

With that hiatus about to end, the 3.06GHz chip will move from $637 to less than $600, sources said. Prices on Intel's 2.26GHz, 2.4GHz, 2.53GHz, 2.66GHz and 2.8GHz chips will also drop.

The pricing move will also put Intel's 2.26GHz, 2.4GHz and 2.53GHz chips at the lowest end of the company's price scale. The 2.53GHz chip will drop from $243 to approximately where the current 2.4GHz is at $193, sources said. Meanwhile, the 2.4GHz and 2.26GHz chips will cascade from $193 to about $163, sources said.

These moves will allow manufacturers that now ship desktops with 2GHz Pentium 4 chips to fit them with 2.4GHz chips for the same price. And desktops with 2.4GHz chips will be able to move up to a 2.53GHz chip for the same price.

Second wave
Intel will follow these February price cuts with another wave of cuts when it introduces its 3.2GHz Pentium 4, which is expected in March. After this second round of cuts, Intel will have moved all of the desktop Pentium 4 chips down an entire rung on its pricing ladder.

The second cut will lower the 3.06GHz chip to about $400, or to the same level where the 2.8GHz chip is now, sources said. The 2.8GHz chip, which lists for $401, will end up at a price below the 2.66GHz chip's $305 list price, the sources said. Finally, the 2.66GHz Pentium 4 will have moved from its price of $305 to about $193, sources said.

Intel's new 3.2GHz chip--which is expected to coincide with the release of a new higher-performance chipset code-named Springdale--will move to the top of Intel's pricing ladder, selling for about what the 3.06GHz chip sells for now, or $637.

Intel is also expected to bring out several slower chips that support the Springdale chipset's new 800MHz bus and that also include its hyperthreading technology. Intel is expected to charge a slight premium for those chips, possibly as low as $15, sources said.

Intel's published pricing is for chips purchased in 1,000 unit lots. Prices for individual chips purchased from dealers can vary from Intel's list, affected by supply and demand.

With the price cuts several weeks away, they are still subject to change but are unlikely to do so because Intel sets its prices and typically notifies customers well in advance of changes.

Meanwhile, AMD is expected to bring out a new Athlon XP 3000+ model early next month. The chipmaker may also cut its prices with the introduction of that chip.