Intel Corp will trim processor prices in January by an average of 14 percent, a smaller margin than the biggest computer-chip maker's cuts this year, Salomon Smith Barney analyst Jonathan Joseph said.
The price changes will come Jan. 27, Joseph wrote in a note to clients, citing a report Intel gave its customers. They will follow average cuts of 40 percent in August and 23 percent in October and come three months after the last reductions, compared with the two-month period between previous ones, he said.
Intel has slashed the price of its Pentium 4 by as much as 84 percent since the chip came out in November, trying to shore up demand and bolster sales of the personal computers that use it.
Currently, supply of the processor is tighter, so the company can be less aggressive with price cuts to fuel demand and stave off competition from Advanced Micro Devices Inc, Joseph said.
"The news is good for investors in Intel's stock," Joseph wrote. "Do not look for accelerated price cuts in 2002."
Tom Beermann, a spokesman for Santa Clara, California-based Intel, declined to comment on the report. The company's shares rose 91 cents to US$31.97 in midafternoon trading. They've added 6.3 percent this year.
Joseph, the top semiconductor analyst in an Institutional Investor magazine poll, Monday said he expects Pentium 4 shipments to beat his estimate of 12 million units this quarter.
In July 2000, Joseph accurately predicted a drop in sales and stock prices for semiconductor makers including Advanced Micro and Texas Instruments Inc. This year, he's correctly forecast previous Intel price moves.
An Intel 2-gigahertz Pentium 4 costs US$401 each in volume shipments. The Celeron chip for low-cost PCs sells for as little as US$64.
Worldwide PC sales dropped 12 percent to 30.6 million units in the third quarter from a year earlier, according to Gartner Inc's Dataquest unit. PC sales are forecast to decline this year for the first time in more than 15 years.
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