Price war set to heat up in chip market

Intel and AMD are continuing their price war, with both chip firms expected this month to make huge reductions in the cost of their microprocessors.

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By  Administrator Published  April 5, 2007

Intel and AMD are continuing their price war, with both chip firms expected this month to make huge reductions in the cost of their microprocessors.

AMD is set to announce massive discounts of as much as 30% next week on its Athlon 64 range, as well as on its low-end chips.

Intel is expected to follow suit on April 22, slashing the cost of its current quad-core processors by 40% and reducing the price of its Core 2 Duo lines. Both vendors outlined their planned price cuts at recent partner conferences.

Some analysts said the cuts were expected as both chipmakers prepare to roll out new lines of processors during the second half of the year - when AMD is scheduled to release its native quad-core offering, codenamed Barcelona. However, others see the cuts as a sign of intensifying competition in the market.

"What you have today are two vendors with products that can be substituted for each other fairly easily, engaged in an aggressive technological and manufacturing battle with each other," Gordon Haff, principal IT analyst at research firm Illuminata, was reported as saying. "This inevitably puts a lot of pressure on pricing, and both AMD and Intel haven't been shy to use pricing as a lever."

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