Both Intel and AMD have announced aggressive price cuts to their processors, but the move has yet to translate into a drop in system costs.
The price reductions range from 20 to 30 per cent on Intel's Pentium III Celeron and Xeon chips, and 29 per cent on AMD's 800MHz Athlon. Resellers have also indicated that the price of Dram memory chips could fall below manufacturing costs in future.
Despite the reductions, the cost of computers sold at retail stores climbed for the fourth consecutive month in January. Stephen Baker, an analyst at researcher PC Data, said the surge is the result of a combination of factors, including a lower amount of customer interest in sub-$600 PCs and consolidation among PC makers.
Baker said the average Windows-based PC sold in January cost $873 or 3.4 per cent more than in December when it sold for $844.
However, Victor de Dios, an analyst at de Dios and Associates, said the price cutting trend could eventually bring Dram prices below manufacturing costs.
"The major Dram manufacturers have reduced their production costs to under $4 for 64Mbit SDrams. That's where they'll hit their pain threshold and will have to cut production to stop the pricing free fall," he said.
For its desktop Pentium III line, Intel lowered the prices of its 800MHz processor-based machines by 24 per cent from $851 to $647. The 750MHz version dropped 29 per cent to $530; the 700 and 667MHz fell by 26 and 25 per cent respectively to $417 and $337; and the price of the 650 and 600MHz chips was slashed by 25 and 24 per cent respectively to $316 and $241.
On the Celeron side, the 533MHz version now costs $127, down 24 per cent from $167. The 500MHz Celeron fell 27 per cent to $93, while the 466MHz Celeron dropped by 18 per cent to $73.
Intel also cut the prices of its existing high-end Xeon products, reducing its 800 MHz version by 23 per cent to $697 and the 733MHz version by 22 per cent to $505. The 667MHz now costs $425, a drop of 15 per cent.
AMD also slashed the prices of its Athlon and K6-2 chips. The price of the 800MHz Athlon fell by 29 per cent and the 750MHz Athlon by 25 per cent. The mid-range 700 and 650MHz Athlon dropped by 25 and 23 per cent respectively to $389 and $299, while the low-end 650MHz Athlon was cut by 21 per cent to $229.
The largest price cut came on the 500MHz K6-2, which was reduced by 40 per cent to $93.
Cotton seedling freezes to death as Chang'e-4 shuts down for the Moon's 14-day lunar night
Fortnite easily out-earns PUBG, Assassin's Creed Odyssey and Red Dead Redemption 2 in 2018
Meteor showers as a service will be visible for about 100 kilometres in all directions
Saturn's rings only formed in the past 100 million years, suggests analysis of Cassini space probe data
New findings contradict conventional belief that Saturn's rings were formed along with the planet about 4.5 billion years ago