Intel Corp. made an announcement today to cut prices for some processors over a period of three months starting next month in order to regain market share from AMD Inc. Intel plans on reducing the price of the Core 2 Quad processor by 50% on July 22. The move will pressure AMD to reduce prices too and probably comes as a response to the upcoming launch of AMD’s own quad-core processors, the Phenom, which will arrive in the second half of 2007.
"Last year, a price war led to a 42 percent decline in annual profit at Intel and a $166 million loss at Advanced Micro."
"Advanced Micro Chief Marketing Officer Henri Richard said last week that he was 'concerned' that Intel would cut prices of quad-core processors and drive down overall levels in the industry."
"'When Intel wants to chase market share, they make these cuts to hurt Advanced Micro directly,' said Albert King, who owns Intel shares among the $10 million he manages as chief investment officer at Prophet Capital Inc. in Taipei."
Intel’s stock increased by 27 cents to $22.20 at 4 p.m. Eastern Time today on the Nasdaq. Since the beginning of this year, Intel has gained 9.6% on its shares. Intel’s price slash will bring the price of the Core 2 Quad to levels on par with its flagship dual-core processor. Moreover, Intel also has plans to drop the price of some of its Core 2 Duos by 24-32% on September 2. Though Intel is also in the business of making chipsets, motherboards, and flash memory, in the first quarter of this year 67% of its revenue came from CPUs. Last year we saw major price cuts to AMD’s Athlon X2s around the time Intel’s Conroe was introduced. Now Intel is returning the favor. It’s probably nothing personal. It’s just business.