Intel Facing Another Rival to Pentium II

Providing new competition that could help drive computer prices down, Cyrix Corp. is scheduled to unveil today a microprocessor that rivals the performance of Intel Corp.’s flagship Pentium products, but at a much lower cost.

The arrival of the new processor narrows what had been a wide performance gap between Richardson, Texas-based Cyrix and rivals such as Intel and Advanced Micro Devices Inc.

Analysts said Intel’s position atop the microprocessor industry is not threatened but that the company could be forced to cut prices on some of its latest products, including the Pentium II.

“This is not going to upset Intel’s apple cart,” said Charles Piller, executive editor of PC World, a magazine that tested the new Cyrix chip. “But there will be pressure on Intel to move prices down.”

The Cyrix announcement is the second challenge Intel has faced recently. Last month, Sunnyvale, Calif.-based Advanced Micro Devices introduced a chip called K6 that also rivals the Pentium II. Intel subsequently slashed prices more than usual on some of its processors.

Santa Clara, Calif.-based Intel supplies the chips that run more than 80% of the world’s personal computers.

The fastest version of the new Cyrix chip, called the 6x86MX, is just slightly slower than than the Pentium II, according to Piller and Cyrix executives. But at $320, the top-end Cyrix chip costs about half what a Pentium II does.

The success of the new processor is critical for Cyrix, one of a handful of chip makers perennially chasing Intel. Cyrix reported a loss of $25.9 million on sales of $183.8 million last year.

The new chip “will form the cornerstone of our entire product line,” said Steve Tobak, vice president of corporate marketing at Cyrix. He added that the product is intended for PCs priced below $1,500, one of the fastest-growing segments of the computer market.

But Tobak acknowledged that Cyrix does not have commitments from any leading computer makers to use the new chip and that the company’s manufacturing capacity is limited.

Cyrix depends on IBM Corp. to build its processors, Tobak said, and the company can ship at most about 10 million chips over the next year. That represents a fraction of Intel’s capacity.

Intel declined to comment on the Cyrix product.

Intel shares fell $3.359 to close at $163.306 on Nasdaq. Cyrix fell $1 to close at $22, also on Nasdaq.