Intel and its main rival Advanced Micro Devices (AMD) have resumed a price war on microprocessors in the face of slowing demand in the European and US corporate PC markets, writes Daniel Thomas.
Intel has been struggling recently with lower than expected earnings, partly because of the slow growth in the PC market but also because of greater competition from AMD which now has a chip that is demonstrably as powerful, if not more so, than Intel's. Some of the faithful Intel customers will also be holding back in anticipation of new product releases.
In the first round of price cuts, Intel has reduced the Pentium III 650MHz and 667MHz chips from $193 (£134) to $163 and the 600MHz chip from $193 to $143, while AMD has cut the price of the 850MHz Athlon chip from $282 to $165.
According to Linley Gwennap, principal analyst for the Linley Group, AMD is reducing its prices, not only to keep up the pressure on Intel but also to try to revitalise the market.
Although Intel appears to be solving its problems in delivering its Pentium IV chips to market, the company has been hit by delivery of its 1.13MHz Pentium III being delayed until quarter two next year. Gwennap said, "It is clear that the company is feeling the pressure from Athlon."