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Intel may cut chip prices
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August 22, 2001: 7:17 a.m. ET
Report: No. 1 chipmaker ready to be more aggressive in challenging rival AMD
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NEW YORK (CNNfn) - Intel Corp., feeling the heat from rival Advanced Micro Devices in the high stakes chips race, is getting ready to sharply reduce prices and develop even faster chips, according to a published report Wednesday.
The Wall Street Journal said Intel (INTC: Research, Estimates) could announce the price cuts of as much as 54 percent on its products by this week. Intel's move would mirror a price slash by AMD, which cut prices by about 49 percent on some products, and introduced its Athlon chips perceived to be a competitive threat to Intel's Pentium III products.
Intel is also expected next week to announce two faster and more powerful models of its Pentium 4 chip, the report said. The new versions reportedly operate at a clock speed of as much as two gigahertz, compared with 1.8 gigahertz for its fastest chip to date, the paper said.
An Intel spokesman confirmed that the two-megahertz chip would be announced next week but declined to comment on the company's pricing strategy, the Journal said.
Analysts speculate the prices of the new models to be about $560 for the two-gigahertz Pentium 4 and $375 for a new 1.9-gighertz version, the report said. Those prices compare with $1,000 Intel charged for its speediest chip -- the 1-gigahertz Pentium III -- that the company debuted in March 2000, the WSJ said.
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"Intel's price curve is significantly more aggressive than anything we've seen before," the Journal quoted Mark Edelstone, an analyst with Morgan Stanley, as saying.
But the report noted that the company does regularly reduce prices of its products, although this year's cuts have been steeper owing to stiffer competition and an economic slowdown.
Intel shares fell $1.13 to $27.07 Tuesday, while AMD (AMD: Research, Estimates) was 29 cents higher at $14.75. 
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