New Intel price cuts threaten AMD

Intel will cut Celeron prices by 6 percent to 21 percent effective June 6.

The price of Intel's top-end 466MHz Celeron will drop 13 percent to $147, while its 433MHz Celeron processor will fall 21 percent to $113. Intel's 400MHz and 366MHz Celeron processors will drop to $93 and $69, respectively.

While AMD stresses that its price cuts earlier in May take into account Intel's long-scheduled move, Intel's Celeron moves make AMD's position in the low-end market more problematic than ever.

To survive long term, AMD needs to get its average selling price, or ASP, up to about $100 per chip. Right now it's still hovering in the $78 range.

AMD hopes to reverse the situation with the release of its K7 chip. The next generation processor - due out at the end of June - could give AMD as much as a six-to nine-month lead over Intel in mainstream PC performance.

Analysts estimate that K7 prices will be somewhere between $200 and $300. If AMD can maintain those prices, and grab an additional 15 percent to 17 percent of the mainstream market, the company could achieve its $100 ASP goal.

The complete story appears at http://www.zdnn.com .