Intel cuts Pentium 4 prices in Asia

Giant chipmaker Intel Corp has reduced prices for its Pentium 4 processor in Asia Pacific by between 11 percent and 19 percent.

SINGAPORE--Giant chipmaker Intel Corp has reduced prices for its Pentium 4 processor in Asia Pacific by between 11 percent and 19 percent.

This was confirmed by Intel Technology Asia Pte Ltd spokesperson Wendy Toh. As earlier reported, Intel is expected to slash Pentium 4 prices in the US by as much as 50 percent this month.

Intel's competitor, Advanced Micro Devices Far East Ltd, declined to comment on the price cuts.

On further cuts, Toh said: "We can't comment on future price decreases but we are continuing our stated plan to bring Pentium 4 processor-based systems down firmly into mainstream price points.

"Part of bringing buyers to stores and Pentium 4 processor-based machines to mainstream price points is to continually increase the performance of the processor. This would also lower the BOM (build of materials) for computer makers, which allows them to decrease system prices."

Intel has been doing this for many generations of processors, she added.

Some PC makers were quick to react to the price cuts but there were others caught offguard.

"We need time to understand the implications and take action accordingly...we are constantly monitoring the (pricing) situation so that we can respond swiftly to meet market needs," said Compaq Computer Singapore managing director Eric Goh.

A Dell Asia Pacific spokesperson also said that prices are continuously reviewed "to incorporate component cost declines and ensure they (prices) are competitive in current market conditions.

IBM, however, intends to respond aggressively to the Pentium 4 price cuts in both the consumer and commercial markets.

"We will be launching a number of Pentium 4 systems in the coming weeks supported by strong promotions and these systems will be priced competitively to take advantage of Intel's reductions," said Mark Lakota, IBM Personal Computing Division Asia Pacific desktop marketing manager.

"At this stage, we expect the greatest demand to come from the consumer and small business segments--many of whom use high-workload applications like 3D games, modelling and design, and project management.

"Going into the third quarter, we expect medium business and large enterprises to follow suit fast with significantly increasing demand," Lakota said. Analysts have warned that the depth of the cuts could pose huge problems as the Pentium 4 is a fairly large chip and expensive to make.

Intel also continues to give PC makers rebates for each PC that includes Rambus memory and, for now, Pentium 4 systems work only with Rambus memory.

In Singapore for instance, Pentium 4 1.3GHz, 1.4GHz and 1.5GHz processors retails for about S$630, S$830 and S$1,100 respectively. These variations come bundled with 64MB PC-800 Rambus memory. At present, a basic Pentium 4 system costs approximately S$3,000.

US Bancorp Piper Jaffray analyst Ashok Kumar said that the discounts would have a catastrophic impact on gross margins. "You're not going to see any seasonal pick-up in demand," he said.

In the US, Pentium 4 systems are priced as low as around US$1,200. Intel has said that it hopes to see prices fall to US$999, including a monitor, by the fourth quarter.

Earlier this month, Taiwan's CTech Web site said that Intel will introduce a faster version of its latest computer processor this month and almost halve the price from the original plan as demand lags expectations.

Citing unidentified computer makers in Taiwan, the report claimed that Intel would offer a 1.7GHz Pentium 4 processor for US$352 by the end of April, instead of the US$637 price planned for May 27.

Today, Intel reported US$1.87 billion in first quarter sales for Asia Pacific (excluding Japan), less US$130 million compared with the same period in 2000.

Its global first quarter revenues decreased to US$6.7 billion from US$7.9 billion in the corresponding period a year ago.