Chip company Intel confirmed last week that it is to make an out-of-cycle reduction on its PII/233 processor this week.
The part will now cost $286 per 1,000 parts, a reduction of 33 per cent on the old price of $401/1000.
Said a representative: "In response to customer requests to establish entry level Pentium II processor based systems in Q1 1998, we are conducting an out-of-cycle price reduction."
The company said that the price cut was aimed at OEMs and was intended to allow them to target the lucrative entry level market.
That coincided with an announcement by HP today that it would offer sub-$800 systems.
AMD is expected to react quickly to match Intel's price slash. It is committed to undercutting the chip giant on processors of this class.
Intel still refuses to confirm or deny that it is to make massive cuts in the rest of its range on 26 January, although distributors close to the company claim this is the case.
Nor will Intel officially confirm that the 333MHz Deschutes processor will arrive on that date, while ceramic Pentium 200MHz MMX chips will see a big price drop on that day.
Intel, said a distributor, is adept at leaking prices early, giving its channels and customers the chance to make their buying decisions.
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