Top microprocessor maker Intel Corp can cut prices on older chips more quickly than in the past thanks to its aggressive adoption of new manufacturing technologies, a spokesman said on June 8.
The maker of Pentium chips has trimmed prices in recent months as it moves to clear inventories and halt market share gains by rival Advanced Micro Devices Inc, and many analysts say they expect steeper cuts in the coming months.
"We have a more aggressive product and manufacturing ramp, so those older Pentium products will move down faster," Intel spokesman Chuck Mulloy said. "It's not like we're cutting prices for the sake of cutting prices."
Intel, which makes about 80 percent of the processors found in personal computers, is at the leading edge of using the latest manufacturing techniques to etch circuits as small as 65 nanometers, a width that is less than 300 atoms across and more than a quarter thinner than the previous generation.
The smaller chips are not only more energy efficient and powerful, but also more profitable for semiconductor companies because more can be cut from a single slice of silicon.
Intel is trying to clear the path for its new line of processors based on a fresh design called "Core" that analysts say helps close the performance and power efficiency gap with AMD's chips.
Core is pushing the Pentium line, its previous flagship products, to the bottom of the company's product portfolio.
"We're going to be able to ramp so quickly with the new (factories)," Mulloy said. "You'll see more of the 65-nanometer Core architecture products at the end of the year than you would see in a historical pattern."
Intel will launch its Core chip for server computers that run networks this month, followed by a new desktop processor in July and a new laptop product in August, Mulloy said.
"We're going to gain market share with the new products. That's where we're going to be focused on the market share," he said.
Mulloy declined to comment on specific price cuts, but Citigroup analyst Glen Yeung said in a note on June 07 that, based on talks with Intel customers, Pentium prices could fall by between 8 percent and 61 percent by late July.
Concern over a price war led Yeung to cut 2006 profit estimates for Intel by 10 percent, to 77 cents a share, and for AMD by 11 percent, to $1.14 per share.
JoAnne Feeney, vice president of research at Punk, Ziegel & Co who has a "buy" rating on AMD, nonetheless said the smaller company would struggle against Intel's price cuts.
"The one concern I have is that Intel is in pretty dire straights in terms of getting rid of their old inventory and old chips," Feeney said. "What we're seeing now is a lot of people sitting around waiting to see what the next prices will look like, and that's hurting AMD."
Jim McGregor, a semiconductor analyst with research firm In-Stat, said Intel's plans to start 65-nanometer production at a fourth factory this year could lead to further mark-downs.
Comments
Comments are closed.