Rival AMD Chip Spurs Intel to Cut Price
In an effort to fend off an unexpectedly strong challenge from Advanced Micro Devices, Intel Corp. said Tuesday that it will cut the price of its 386 microprocessors by 35%.
Until last year, Intel held an extremely lucrative monopoly on the 386 chips, which form the brain inside the most popular personal computers. AMD’s line of 386 “clones,” introduced last spring but initially dismissed by Intel as unimportant, may now be garnering as much as 30% of a market worth more than $1 billion annually.
Intel is trying to convert PC manufacturers as quickly as possible to the more advanced 486 chip, which faces no competition, and is pushing the highly integrated 386 SL chip for notebook PCs.
An Intel spokesman said sales of these next-generation products will surpass 386 sales in the fourth quarter for the first time and could reach 4 million to 5 million units per quarter next year, against 2 million units for all of 1991.
The 386 price cut should help the chip become a standard even for low-end home computers priced at under $1,000, the spokesman said.
An AMD spokesman said the company had not yet prepared a response to the price cut, but added: “AMD will always be a price competitor with Intel and will always offer superior value at a comparable price.”
Intel also said that fourth-quarter profit will exceed analysts’ expectations and that the company will push ahead with an ambitious investment program next year that includes $1 billion in capital spending and $700 million to $750 million in research and development.
