The move is seen as a response to an anticipated decline in Intel sales during the first quarter of this year.
The Wall Street Journal reported that the California-based chip giant is planning to cut the price of the 1GHz Pentium 3 by 43% to around $270. There will also be reductions on Pentium 4 chips, mobile Pentium 3 chips and Celerons.
Joe D'Elia vice president and research director of analyst group Gartner said of the price cuts:
"Intel is trying to stimulate migration to higher processor speeds and preparing the way for the Pentium 4 to become mainstream, which they want to happen by the first half of 2002. Lowering the price of the 1GHz Pentium 3 provides customers with a first step."
Martin Hingley, IDC's European systems group vice president added:
"This is an obvious follow on from their profits warning and we can expect Intel to be clearing their shelves of their 1GHz processor. However this doesn't necessarily mean a blanket decrease in price of systems based on the chip. Vendors may add extra components or more memory rather than passing the saving on to the customer."
According to the Wall Street Journal, Intel is expected to announce the price changes next week. An Intel spokesperson refused to comment.