Intel aims to make AMD eat dust

During a U.S. Bancorp Piper Jaffray conference for financial analysts, Anand Chandrasekher, vice president of Intel's Architecture Group, all but confirmed that the chipmaker would launch its 2GHz Pentium 4 later this month, cut prices and go for the jugular of rival Advanced Micro Devices.

Repeating statements made by Executive Vice President Paul Otellini during the company's second-quarter earnings conference call, Chandrasekher said Intel will move aggressively to make Pentium 4 the standard chip for PCs. The main weapon will be price cuts, prompted by more efficient chipmaking methods and the introduction of Intel's 845 chipset, which will allow PC makers to pair the Pentium 4 with cheaper SDRAM memory.

That means, Chandrasekher said, that Intel's 1.5GHz and 1.6GHz Pentium 4 processor will take the place of its 900MHz and 1GHz Pentium III chips that are currently used in PCs priced between $800 and about $1,200.

All this shows "a pulling away from the competition at this point," Chandrasekher said.

"By the end of this quarter, August, we'll be at a 500MHz" advantage over the fastest AMD chip, he said. "It's our intent to maintain that (lead) over time."

Although he did not mention the competition by name, Chandrasekher was referring directly to AMD's Athlon processor. Intel's fastest chip is a 1.8GHz Pentium 4 and AMD's is a 1.4GHz Athlon. The introduction of the 2GHz Pentium 4 will widen the gap to 500MHz once AMD introduces its 1.5GHz Athlon, expected later this quarter.

Intel's chip will offer 500MHz more in clock speed, giving Intel an advantage when it comes to marketing the Pentium 4. But analysts say the new Athlon should be able to keep up by posting strong overall performance numbers rivaling the Pentium 4.

As previously reported, Intel will use the 2GHz chip as a tool to both extend its speed lead and cut prices on existing chips. The combination of lower prices on the 1.5GHz and 1.6GHz and the 845 chipset, which will pair the chips with low-cost SDRAM memory, should allow PC makers to hit Intel's $800 goal for Pentium 4 systems.

Chandrasekher declined to comment on recent analyst reports that have sent Intel's stock down by speculating the chipmaker is planning even more drastic price cuts.

"This is not really new news," Chandrasekher said. Otellini also indicated during the second-quarter call that Intel would further reduce prices on Pentium 4 chips this month.

Meanwhile, Intel will beef up its Celeron chip considerably. Now targeted at PCs priced at $800 and less, the Celeron will gain clock speed and be made under a new manufacturing process before the end of the year.

Intel will push the chip to 1.2GHz by the end of the year, Chandrasekher said.

It is likely that Intel will introduce its 1GHz Celeron relatively soon. A 1.1GHz chip is also expected.

The company has said it will transition Celeron to the 0.13-micron manufacturing process later in the year, which should lead to a 1.2GHz chip.