Intel, AMD Slated to Cut Chip Prices This Week

SAN FRANCISCO (Reuters) - Reflecting a continuing price war between Intel Corp. INTC.O and Advanced Micro Devices Inc. AMD.N, No. 1 chipmaker Intel planned on Sunday to cut prices on its microprocessors, industry sources said.

Intel typically cuts prices on a few or several its microprocessors on a Sunday and publishes the magnitude of those reductions on Monday as it announces new chips. But this time, the sources said, it will announce just the price cuts. Intel's Pentium 4 chips running at 2.2 gigahertz will ship late in the fourth quarter and be announced in January.

AMD will follow suit by trimming prices on its Athlon chips, sources said. Intel has lost market share through the first half of this year, dipping to below 78 percent. But because of the fierce price war undertaken by Intel against AMD, in the third quarter Intel regained 0.8 points of market share to 77.5 percent. "It certainly has had a dramatic impact on the profitability of both companies and it hasn't really stopped AMD's gains in market share," Insight 64 analyst Nathan Brookwood said of the price war. "By and large, AMD has been selling virtually everything it can make, it just hasn't been selling it at the prices it would like."

Intel's fastest chip available right now, the 2.0 gigahertz Pentium 4 costs $562 in lots of 1,000 and will come down about 30 percent to $400 or so, the industry sources said. The 1.9 gigahertz Pentium 4 will also come down in price.

Certain Pentium III chips will also be cut, as Intel works to phase out that processor. Intel said that in the third quarter, shipments of the Pentium 4 topped those of the Pentium III for the first time.

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