The US downturn has sparked off a price war in PC microprocessors.
Intel has introduced a 1.7GHz Pentium 4 processor with a unit price of just $352 for volume orders. In comparison, The company introduced a 1.1GHz PIII chip last July at $990.
Intel says the aggressive price is the result of moving production to a 1.8µm process levels. But it is also a direct challenge to Advanced Micro Devices (AMD), which has given Intel a bloody nose, particularly over high-performance chips in the past few months.
Slower 1.5GHz P4 chips will sell for just $256, down from $637 when it was launched last November. The 1.3GHz version will now cost $193.
After controlling more than 90% of the desktop processor market for much of the 1990s, Intel's market share has been under serious attack. It dropped sharply to 77.3% in the first quarter of this year, from 81.5% for the fourth quarter of 2000. AMD's share has grown to 21.1%.
The ball is now back in AMD's court. Its fastest processor currently runs at 1.33GHz and sells for $319.