Intel fires shots in price war

Intel is paving the way for the launch of its Pentium 4 chip by slashing prices on its Pentium III and Celeron products.

The cuts, which vary from five to 36 per cent across the Intel range, are widely seen as a bid to start a price war with rival chip maker AMD. But AMD so far is not biting.

The two companies were locked in a ferocious price war until earlier this year when a shortage of microprocessors forced prices to stabilise. Now that supply has improved, AMD is vowing to keep its Duron chip out of a repeat conflict.

The company is choosing instead to compete in terms of performance. Last week, it released its 760 chipset, which connects its Athlon processor with Double Data Rate (DDR) DRam, a faster version of ordinary memory.

In tandem, DDR memory and the new chipset increase the flow of data from memory to the processor, says AMD. DDR runs at 200Mhz or 266Mhz, twice as fast as standard memory. The 760 chipset runs at 200Mhz, the same as current Athlon chipsets, or at 266Mhz. AMD has also launched three new versions of the Athlon to coincide with the new chipset.

A substantial portion of the saving from Intel's latest round of price cuts will end up benefiting PC buyers, say analysts.

Graham Fisher of Bloor Research said: "Ultimately, the buyer is the winner from all this competition." He believes Intel still controls the pace of the processor market. "It is not running scared, since it is still a technology leader as well as a clear market leader," he said.

The launch of Pentium 4, slated for 20 November, could well change market dynamics by early 2001. The Pentium 4 will debut at 1.4Ghz and 1.5Ghz, while the accompanying chipset will run at 400Mhz. Although the Pentium 4 will likely work with DDR DRam eventually, it will only be paired with RAMbus memory initially.

AMD plans to counter with a 1.5Ghz Athlon early next year, as well as an enhanced version of Athlon, codenamed Mustang.