updated 11:50 am EDT, Fri September 17, 2010
Intel drops chip prices by 50pc to recover sales
Intel is slashing processor prices to keep demand alive and possibly to offset the iPad effect, Canaccord Genuity analyst Bobby Burleson said today. The chip producer was reported in checks as having cut prices by half on Atom, Core i3, Core i5 and Core i7 chips and by 15 percent for some chipsets. The move was predicted to fuel short-term demand, though it would come mostly from computer builders stocking up.
Acer, HP and Lenovo have all cut prices on the notebooks themselves, but the companies don't see demand increasing as they enter the fall, Burleson said. He was worried that companies might try to ship too many systems to China to make up for slowdowns in Europe and the US, creating another overstock problem. High-end buyers may also be waiting for Sandy Bridge chips that won't be ready until the start of 2011.
Sparking interest is Intel's most likely aim, though it's not clear whether the cuts are directly the result of worries. PC builders except for Apple are cutting orders, but Intel also regularly launches minor revisions to its chips that push the prices down of slower models.
The news still comes on the heels of signs that the iPad may be taking away from notebook sales at US retail and may be directly hurting Intel's business by opting for the iPad's ARM-based design instead. Although roughly as expensive as a low-end notebook, the iPad is much thinner and lighter and is sufficiently different enough that it could attract buyers who would otherwise have bought a netbook as a cheap secondary PC. [via Barron's]