Intel will announce price cuts tomorrow on a range of its processors, to help beat off opposition from competitors Cyrix and AMD. The cuts are on Pentium processors rather than Pentium Pros because a shortage of P200 Pros has kept the price up.
The move anticipates the announcement of three new generation Pentium II processors, codenamed Klamath, which are now scheduled for 6 May.
Observers believe the cuts will help Intel to bolster profits and sales through its second quarter, which is anticipated by officials to be flat. Intel will not announce the price of its Pentium II cartridges until 6 May, although details were revealed by 'VNU Newswire' in October last year.
Uncertainty among PC vendors has caused spot buying on the grey market, according to insiders at Morgan Stanley. Intel will make further cuts in prices on 1 August and 1 November, they added. In a report to their customers, the analysts say the cuts are not a predatory move against AMD but a reflection of Intel's "improving product mix...and its desire to continue to stimulate PC unit growth."
They said that Intel will move its processor price and performance by beginning production of .25 micron chips with between 30 and 50 per cent smaller die sizes. The cuts Intel makes, they say, will create additional demand for both memory chips and CPUs at the beginning of May.
They also said they think that AMD is likely to benefit from a better product mix shift. AMD will beable to compete with Intel in the upper range of the chip market at prices between 20 and 40 per cent less, they added.
An Intel spokesperson this afternoon confirmed prices on some processors were down. The P166/MMX drops in price from $295 to $209, a drop of 30 per cent, and the P200/MMX drops from $539 to $492.
But the Pentium Pro shows no change because of demand from third parties to use it in their multiprocessing servers, he said.
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