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Intel Cuts Processor Prices

January 21, 2009

Intel Corp, the world’s largest computer chip maker, is cutting prices on a number of its high-powered processors in an attempt to cope with falling sales.

The company is facing weakening demand due to the global economic slowdown, and competition from Advanced Micro Devices Inc, but Intel says the changes are part of regularly scheduled price decreases.

Among the chips Intel is reducing, the Core 2 Quad Q9650 chip saw the one of the largest drops from a $530 list price in December to its new price of $316.  The company also lowered prices on other quad-core chips, which have four processors on a single piece of silicon.

AMD, which has generally sold processors at cheaper rates than Intel, recently released its line of Phenom II quad-core chips which sell for $275.

According to Doug Freedman, analyst for American Technology Research, AMD has a much stronger portfolio than they did a year ago.  Freedman added that Intel’s move was a response to the current economic climate.

“I would put it as a standard move with the caveat … that the marketplace is far from in a standard condition and there’s a more viable product out of their competitors,” Freedman told Reuters. “To think that there is some impact there, yes, but I wouldn’t be ready to call it the start of round two of a price war.”

Intel also slashed prices on chips for notebooks and servers, along with other processors for use in desktop computers.  The company’s Xeon server chips were cut by 40 percent, while its Celeron mobile processor was cut 48 percent.  The popular Pentium dual-core chips were lowered 24 percent.

Along with the price cuts, Intel introduced three energy-efficient Core 2 Quad processors for use in desktop computers.

Last week, the company reported a 23 percent drop in fourth-quarter revenue, but said it is expecting levels to bounce back by late 2009.  The company would not release any quarterly forecasts due to uncertainty in the market.

Image Caption: Paul Otellini, president and CEO of Intel Corp., displays the new Intel Core 2 Duo processor, on July 27, 2006, during an event at Intel headquarters in Santa Clara, Calif. Intel today unveiled the new high-performing, energy-efficient Intel Core 2 Duo processors for consumer and business PCs, laptops and workstations. (UPI Photo/Court Mast/Intel)

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