AMD Chips Away at Prices

Chipping away at the costs of its PC processors, AMD lowers official prices up to 20 percent.

Advanced Micro Devices chipped away at the costs of its PC processors last week, lowering official prices up to 20 percent, although buyers could acquire the chips at even lower prices from various resellers on the Internet.

AMDs desktop processors accounted for the largest cuts posted late Friday, although the chipmakers fastest processor, the Athlon XP 2200+, was trimmed only a modest 5 percent, from $241 to $230.

However, the Athlon XP 2100+ was slashed 20 percent, from $224 to $180; the XP 2000+ dipped 16 percent, from $193 to $163; the XP 1900+ slid 13 percent, from $172 to $150, the XP 1800+ was reduced 11 percent, from $160 to $142; and the XP 1700+ was lowered 7 percent, from $140 to $130. (Prices based on 1,000-unit shipments.)

The worlds second largest PC chipmaker also reduced prices on a couple of its mobile products, cutting the cost for its XP 1700+ for notebooks by 11 percent, from $235 to $210, and trimming the price for its mobile XP 1600+ a mere 4 percent, from $192 to $185.

But AMDs well-known reputation for selling chips below list price remains intact, with Internet-based resellers offering the companys fastest chip, the XP 2200+, for as little as $208, or about 10 percent below the companys official price.

Such cost discrepancies underscore AMDs struggles to compete against much larger rival Intel Corp., which has become increasingly competitive on price, as well as pulled ahead on the top-end of the market.

Currently, Intels top performing chip, a 2.53GHz Pentium 4, holds a 700MHz frequency advantage over AMDs fastest chip, the 1.8GHz Athlon XP 2200+.

While AMD contends the Pentium 4s clock speeds are misleading, company executives have admitted that Intels perceived performance advantage has left the company unable to compete in the most profitable segment of the PC market: computing enthusiasts who pay top dollars for fast machines.

Heightened competition from Intel and lackluster demand for PCs have battered AMDs bottom line, with the company posting mounting losses in recent quarters. This month, the Sunnyvale, Calif.-based chipmaker posted a lost of $184 million for its just concluded second quarter, as its overall sales tumbled 39 percent from the same period a year ago.

While AMD executives said theyre optimistic the company will fare better in the second half of the year, the chipmaker said it still expects to post another loss for the third quarter.

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