Intel ready to slash processor prices

Intel is believed to be preparing to slash the cost of its desktop Conroe processor when it comes out on 23 July, sparking a price war with arch rival AMD.

Some Core 2 Duo processors are expected to come down by over half, with one Conroe iteration dropping from $209 to $95. PC makers hope that it will generate a lift in computer sales, as well as creating interest in the upgrade market.

According to sister title the Inquirer, AMD also plans to cut the price of its CPUs, but one industry source, who asked not to be named, told PCW: “We’re hearing that AMD will drop the price [of its CPUs] before Intel. We expect that if this happens the Intel will drop the price further.”

With Conroe’s move to a smaller wafer, it is easier now for Intel to drop the price, because it can get more processors out of each wafer.

AMD has seen its market share rise over the past couple of years, partly because it beat Intel to consumer level 64bit chips, but also because it sells its processors for less than Intel, making PCs based around its CPU generally cheaper to buy.

Although still the dominant player, sources said that Intel wants to claw back its lost share, and thinks it can use Conroe to do this. “They are ready to have a fight with AMD,” said one.

A number of manufacturers here at Computex are gearing up for the latest Intel and AMD processors. Many have said that sales in 2006 have been very slow, with consumers holding back for the new generation CPUs from AMD and Intel and for Microsoft to release its Vista operating system.

Sharon Pan, product manager at Asus, said: “When you get a price drop you always get some market share, but it’s short term because it’s a dynamic market. It will help motherboard sales.”

Ken Lin, who works in the R&D department at ECS, commented: “[It] will help with sales. We know the pocket depth of the end user is limited.”

Intel refused to confirm or deny the speculation about an impending processor price war, saying only that the price list for new Core 2 Duo processors will not be published until launch day in July.