Latest IBM PCs Use Intel’s New Microprocessor : Technology: The two models are the first to incorporate the 486SX chip. Price cuts of up to 38% were also announced for many existing units.

International Business Machines Corp. introduced two personal computers Tuesday based on a new microprocessor from Intel Corp. and cut the prices of many of its existing PCs by up to 38%.

The world’s largest personal computer maker said it was the first manufacturer to ship PCs based on Intel’s 486SX microprocessor, a lower-priced version of Intel’s top processor chip, the 486.

Microprocessors are the “brains” of personal computers. Intel announced the 486SX on Monday, positioning it between its popular 386 microprocessor and the costly 486.

The two new IBM models, the PS-2 Model 90 XP 486 and Model 95 XP 486 SX, are priced from $8,345 to $12,695, depending on the size of the hard memory disk.

The cheapest of the new models is about 25% lower in price than the lowest-price entry-level 486 model, IBM said.

Several other computer makers said Tuesday that they will make PCs based on the 486SX processor, but IBM said it was the first to actually ship the products.

The price cuts on many of IBM’s existing PCs range from 3% to 38%. IBM also doubled the standard memory on many of its models at no extra cost.

James Cannavino, IBM’s vice president in charge of PCs, said the price reductions partly reflect improvements in manufacturing efficiencies. As a result, IBM’s profit margin on the computers will not be hurt, he said.

“We’re also cognizant of the economy and the competition and want to make sure we continue to give good value to our customers,” he said in an interview.

Last week, Compaq Computer Corp., largest maker of IBM-compatible personal computers, slashed prices of its PCs by up to 34%. Compaq said the cuts were aimed at increasing market share.

Two weeks ago, IBM reported that sales of all its computers fell 17% in the first quarter. Cannavino said PC sales fell by about that amount as well.

But he said the drop was more a result of crimped supply than the effects of the economy and the Gulf War, which hurt business worldwide. IBM reduced PC production in anticipation of a slowdown, but was more pessimistic about sales than they actually turned out to be, he said.

He predicted sales growth of IBM PCs for the entire year will match the growth rate of the PC industry as a whole.

“We are very optimistic about the rest of the year,” he said.