Intel Schedules Unexpected Price Cut

May 18, 1999 (4:52 PM EDT)

By Mark Hachman,

Intel will cut the prices of its Celeron microprocessors again in June, according to analysts and an original equipment manufacturer.

The scope of the cuts was not immediately available. However, industry sources said Intel will cut prices on its desktop Celeron microprocessors on June 6. A reduction in the price of the 400-MHz Pentium II may also take place, an OEM source said.

Analysts say this next wave of unscheduled cuts areIntel's response to the increasing price competition in the low-end microprocessor market. The current market conditions are a result of a combination of Intel's aggressive shift to 0.18-micron manufacturing technology, the improved yields of Advanced Micro Devices' own microprocessors, and the possibility that National Semiconductor may heavily discount its MII microprocessors.

Both the NECX Global Exchange as well as the RAMDEX index from the American IC Exchange note that most Celeron processors are already being sold for less than their contract price. For example, the 366-MHz Celeron in a 370-pin PPGA package should be selling for $71, in high volume, but NECX reported that 366-MHz Celerons are being traded at $68, an indication that available supply exceeds the current demand.