Subject: Intel to start Price War....
Date: 4/24/2001 8:39:34 PM (GMT-7)
IP Address: 22.214.171.124
Found this today - most of you are probably aware and have threaded the issue...here goes anyway...
Intel's Plan to Slash Chip Prices
Could Be Start of a Price War
By DAN GOODIN
Staff Reporter of THE WALL STREET JOURNAL
A surprisingly large price cut by Intel Corp. is raising the specter of a price war that could deliver a major leap in computing power to consumers even as it squeezes profit margins of chip makers.
Analysts say that Intel, which has been losing market share to rival Advance Micro Devices Inc., will have cut prices by 50% to 60% by the end of the month on some of its highest-performing chips. It had been expected to reduce prices by about 20%.
AMD has yet to announce its own price cuts, but the Sunnyvale, Calif., chip maker is known for selling chips below prices charged by Intel, its Santa Clara, Calif., nemesis.
Market conditions in the semiconductor industry, the worst in nearly a decade, are egging both companies on. Intel has declined to specify the magnitude of the pricing change, which was reported by analysts on Thursday and confirmed by other people familiar with Intel's plans.
"This is going to be a big year for price wars, because you've got more manufacturing capacity than demand, by a large margin," says Rob Enderle, an analyst with Giga Information Group in Santa Clara.
The biggest surprise is a powerful new version of Intel's Pentium 4 chip, running at 1.7 gigahertz, which isn't set to be announced until April 23. Dan Niles, an analyst at Lehman Brothers, says it is likely to be priced at about $700 and then slashed to about $350 on April 29.
As a result, consumers should be able to buy computers with that high-end chip for about $2,000, analysts say. Just six months ago, the same money typically fetched a machine that ran half as fast.