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More 'fighting' in chip price war

More 'fighting' in chip price war

Intel slashed prices on a handful of microprocessors after the company's battle to retake market share from rival Advanced Micro Devices Inc. (AMD) took a turn for the worse.

Intel appears to have undertaken some precision cutting in this round, re-pricing chips likely to catch attention, such as a quad-core microprocessor aimed at desktop PCs. The company slashed the price of the Q6600, a Core 2 Quad processor that runs at 2.4GHz, to US$266, down 50 percent, according to a new price list on Intel's web site dated July 22.

[• See Replacing Your CPU - processor upgrades now practical for older PCs in Opinion section of ths website]

The company also ventured where rival AMD dared not to when it reduced prices earlier this month, cutting prices on some processors aimed at laptop PCs. Intel reduced prices on two Celeron M processors by 20 percent each, a 1.73GHz Celeron that now sells for $107 and a 1.60GHz Celeron now reduced to $86 per chip. In servers, Intel slashed the price of its X3220 Xeon Server processor, which runs at 2.4GHz, to $266, down 50 percent. The price of the Xeon X3210, a 2.13GHz chip, was lowered 47 percent to $224 each. The prices are all for lots of 1000 chips.

This round of price reductions by Intel was different than in prior quarters. The company lowered prices on fewer products, but it appeared to take aim more carefully. The difference may be in the fact its own profit margins have suffered during the pricing battles with rival AMD, or it could be in the fact that despite mounting losses, AMD was able to retake some market share from Intel in the second quarter.

Intel's main rival stopped a six month decline in market share during the second quarter, according to preliminary estimates from iSuppli Corp. AMD's market share climbed a half a percentage point in the second quarter to 11.4 percent, while Intel's fell by exactly the same amount to 80.3 percent, the industry researcher said.

"This ended a major resurgence in market-share during the prior two quarters for the microprocessor giant," iSuppli noted.


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