Intel Trims Prices on Celeron Chips

Intel Corp., the world’s top producer of semiconductors, said Monday that it cut prices for its low-end line of Celeron microprocessors by up to 14%, paving the way for a faster Celeron chip.

“It’s consistent with Intel’s history of making room for new chips coming in at a higher performance level,” said Graham Tanaka of Tanaka Capital Management, which manages $125 million in assets and owns close to 100,000 Intel shares. “Chips get faster and cheaper with every cycle.”

The Celeron line for desktop PCs is slower and less expensive than Intel’s flagship line of Pentium chips. Prices range from $69 to $89, compared with $163 to $637 for the Pentium line.

The price cut came three days after Intel unexpectedly raised its quarterly sales forecast to $7.3 billion to $7.8 billion, up from earlier guidance of $6.9 million to $7.5 million. The increase was seen in almost all product categories, suggesting stronger demand for computers and gadgets and fueling hopes that a recovery might be underway for the long-struggling technology industry.

But Intel Chief Executive Craig Barrett damped such speculation Monday at a briefing in Taiwan.

“Our forecast increase isn’t necessarily a sign that we are seeing a turnaround,” Barrett said.

Intel posts price reductions on its Web site every Monday. Of the six Celeron desktop chips listed this week, one price was unchanged, one was trimmed by 6%, three were cut by 7%, and one -- the fastest with a clock speed of 2.6 gigahertz -- was reduced by 14%.

“This is Moore’s Law in action,” Intel spokesman Robert Manetta said, referring to the maxim attributed to Intel co-founder Gordon Moore that the cost of computing power falls steadily over time.

Intel is expected to introduce a 2.7-gigahertz Celeron chip that could carry a price tag of about $103, said Shane Rau, a microprocessor analyst with technology market researcher IDC. The price for the 2.6-gigahertz Celeron was reduced Monday to $89 from $103.

Intel supplies microprocessors to about 80% of the world’s personal computers. The Santa Clara, Calif., company also manufactures chips used in cell phones and hand-held personal digital assistants.

Intel shares dipped 15 cents to $27.24 on Nasdaq.

Bloomberg News was used in compiling this report.