Intel Corp. is expected to cut prices on its highest-performance Pentium 4 processors and other chips over the weekend as the world's largest chipmaker passes on cost savings from new manufacturing technologies, analysts said.
"We would expect that they're going to reduce prices," said Joe Osha, analyst at Merrill Lynch. "Intel's going to try and price things to make sure they're moving people to Northwood."
Northwood is the code name for Santa Clara, California-based Intel's newest Pentium 4 chip, in which some of the dimensions are as small as 0.13 microns. By comparison, a human hair is about 50 microns wide.
By moving to smaller line widths, Intel is able to put 55 million transistors on a single chip, and it has said it gets about twice as many chips per wafer on the 0.13 micron manufacturing process than with the 0.18 micron process.
The fastest Pentium 4 chip now runs at 2.2 billion cycles per second, or 2.2 gigahertz, costing $562 in lots of 1,000. When Intel introduced that chip on Jan. 7, it dropped the price of its 2.0 gigahertz Pentium 4 made with 0.18 micron technology to $342.
"If the 2.2 gigahertz Pentium 4 is above $500 on Monday I'll be very surprised," said Nathan Brookwood, president of market research firm Insight 64. He estimated that Intel will drop the price of that processor to the high $400 range, implying a decrease of about 15 percent.
An Intel spokesman declined to comment on the price cuts.