Intel May Slow Chip Price Cuts
Price cuts for Intel Corp. chips won’t be as big next year or come as often as they have, an industry analyst said Monday--even as the chip maker unveiled new technology that will make snails out of today’s fastest microprocessors.
Intel will trim prices in January by an average of 14%, a smaller margin than its reductions earlier this year and “one of the mildest cuts in memory,” analyst Jonathan Joseph of Salomon Smith Barney in San Francisco wrote in a note to investors.
Joseph, who correctly forecast previous Intel price drops that seemed to come “almost every month,” said the next cuts will arrive Jan. 27--three months after previous price cuts.
“The news is good for investors in Intel’s stock,” he wrote. “Do not look for accelerated price cuts in 2002.”
The Santa Clara company lopped an average of 40% off prices in August and an additional 23% two months later. Since November, it has slashed the price of its Pentium 4 by as much as 84% to shore up demand and bolster sales of the personal computers that use it. Microprocessors are the basic brains that run computers.
Now, with supplies tighter, the company can be less aggressive with price cuts to fuel demand and stave off competition from its main rival, Advanced Micro Devices Inc., Joseph said.
Intel spokesman Tom Beermann declined to comment on the report. Intel shares increased 81 cents to close at $31.87 in Nasdaq trading.
The Intel 2-gigahertz Pentium 4 costs $401 each in volume shipments. A Celeron chip for low-cost PCs sells for as little as $64.
Intel, meanwhile, unveiled the key component of a chip that will run 500 times as fast as today’s speediest microprocessors--and will run cooler and use about the same amount of energy.
Its so-called TeraHertz transistors, still in research, will operate at a speed of 1,000 gigahertz and will be smaller than those on today’s 2-gigahertz chips, the company said. The new chips could be released as early as 2005.
Intel has been pressing developers to boost the speed of chips while reducing the power needed to run them. The TeraHertz transistor would accomplish both tasks. These transistors will switch on and off a trillion times a second to regulate the flow of electricity in chips. The company will reveal technical details of the design at a conference on Monday in Washington. Intel also will tout working models of transistors just 15 nanometers wide.
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Times staff writer James Granelli contributed to and Bloomberg News was used in compiling this report.
