AMD's Price Cuts May Force A Response From Intel

AMD's price cuts over the last few months, a response to Intel's release of the Core 2 line of CPUs last year, may finally be pressuring Intel to make some price cuts of its own. So what does this mean for you? If you're in the market for a new AMD or Intel CPU, expect to continue to see prices drop on both sides.  

Price competition is sparking up again between the world's largest chip makers, Intel Corp. (Nasdaq: INTC) and Advanced Micro Devices (NYSE: AMD). As Intel took a technological lead late last year, AMD responded with "frantic price cuts" after a weak start to its first quarter, Needham analyst Y. Edwin Mok said in a note to clients on Tuesday. Mok contends AMD has cut prices three times in three weeks to spur demand. "Intel will likely feel pressured to respond with cuts of its own," Mok contends, driving down profits for both firms. "We would avoid both names here, as believe lower prices and higher capital spending may continue to limit margins." He says AMD is offering "very competitive pricing" to Dell (Nasdaq: DELL) in order to win more market share, and that as a result, is helping penetration at the computer maker.
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