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Friday, June 09, 2006
Intel, AMD Cut Prices to Gain Share


Customers of Intel and AMD claim that both computer-chip maker plan to reduce prices on their Pentium and 939 and AM2 sockets respectively by as much as 50 percent to gain market share

Executives at MSI and Gigabyte Technology Co., two of Taiwan's biggest makers of circuit boards for computers, said Intel officials told them the price cuts will start July 23.

AMD last quarter increased its share of the $35 billion computer chip market to more than 20 percent for the first time in more than four years. Intel Chief Executive Officer Paul Otellini forecast the company's first annual sales decline in five years and Dell Inc. decided last month to buy some Advanced Micro chips for the first time.

"They're very aggressive about getting market share back," said Max Tsai, a product manager at Gigabyte in an nterview with Bloomberg. Tsai said yesterday that his Intel account manager in Taipei said prices will be cut. "We're all surprised."

Intel said it will reduce prices of faster dual-core chips by about 15 percent, according to Alex Lin, a product marketing manager at MSI, Taiwan's third-largest maker of motherboards, which connect electronic parts in computers. Intel also told him that it plans to lower Pentium prices by 60 percent.

Intel will launch its Core chip for server computers that run networks this month, followed by a new desktop processor in July and a new laptop product in August, Intel spokesman Chuck Mulloy said.

"We're going to gain market share with the new products. That's where we're going to be focused on the market share," he said.

Mulloy declined to comment on specific price cuts, but Citigroup analyst Glen Yeung said in a note on Wednesday that, based on talks with Intel customers, Pentium prices could fall by between 8 percent and 61 percent by late July.

On the other hand, AMD isn't positioned for a price war, according to industry sources. However, if Intel chooses to create a more aggressive market environment over the long term, that's something AMD has to respond to.

Online reports already indicate that AMD is readying some rather substantial price cuts across its Socket AM2 line of processors. According to distributor prices obtained by the Inquirer site, Athlon 64 3000+, 3200+, 3500+, and 3800+ chips will drop to $89, $99, $109, and $139, respectively. If genuine, those figures will be up to twice as low as those in AMD's current price list, which shows prices of $189 and $290 for the 3500+ and 3800+. In addition, AMD's entire Socket AM2 lineup is expected to see prices slashed.


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