Intel To Cut Quad-Core Processor Prices On July 22

Intel has sent a message to its 130,000+ resellers and white-box builders, informing them that it will cut the prices of its still-new, quad-core processors next week. From all appearances, the move is the chip giant's way of returning fire in a price war initiated by AMD.The smaller chip maker last week sheared as much as 33 percent of off some of its prices, but since AMD doesn't yet have any quad cores--those chips are coming later this year--its highest-profile cuts were to its top-of-the-line dual-core Athlon FX models.

By coming back at 'em with the quad-core cuts, Intel is essentially firing a metaphorical bunker-buster shell back at a rival whose heaviest artillery amounts a hand grenade.

Here's the money quote from the Intel:

When Intel says it's reducing prices on "select" quad-core processors, it's really being rather coy. That's because, currently, it only offers three desktop quads: the Core 2 Quad Q6600, Core 2 Quad QX6700, and Core 2 Extreme QX6800.

Which one will Intel "select"? I'm guessing it'll cut the Q6600 and the QX6700, but leave the top-of-the-line QX6800 will be left alone. When consider the cuts, you've got three warring impulses. On the "cut" side of the equation are desire to spur quad-core adoption (i.e., up-sell dual-core customers) and to beat AMD into oblivion. However, that's opposed by the desire to maintain for at least a few short months one part with a nice, fat ASP (average selling price).

High ASPs are the holy grail of chipmakers, and Intel CFO Andy Bryant must be tearing his hair out at the prospect of having to redo all the manufacturing spreadsheets. Not to worry, though. Intel will recover an lost ASP mojo with the slew of new 45-nm quads it's preparing. They will likely hit the market while AMD is still on its first 65-nm quad generation.

Back to the pricing. According to Intel's list, the Q6600, QX6700, and QX6800, are priced at $530, $999, and $1,199. (These are "tray," or OEM prices. The boxed prices will be slightly higher.)

Now, here's where it gets interesting. The relevant portion of AMD's widespread recent round of cuts is what it did to high-end Athlon 64 FX-74 and FX-72 processors. It cut the both of them to $599 each, from $999 and $799, respectively.

So, already we have a situation where Intel's lowest quad is roughly the same price as AMD's best dual cores. Presumably, Intel will chop more off of the Q6600, and maybe quite a bit off of the QX6700.

It's bad enough for AMD that this'll undercut its high-end dual-core parts. What's even worse is that Intel is now effectively setting the bar for what AMD can charge for its quad parts. That is, unless Phenom is a real phenomenon coming out of the gate, AMD can price it no higher than the Intel quads against which it directly competes.

For AMD, the pressure to release Phenom soon is growing. The current time line from AMD is that its Barcelona server quad-core parts are due this summer (like August), with Phenom expected to follow later in the year.

I queried AMD the other day on reports coming out of Taiwan that Phenom would be delayed until 2008. "AMD Phenom desktop processors are on track for launch in the second half of 2007," came the response from a PR rep.

As I've previously reported, the new 10h architecture which forms the basis for both Barcelona and Phenom is impressive. However, amid early reports of kinks--potential clock-speed issues--AMD is under the gun, both to meet its shipping targets for its quad parts and to plan a strategy for this coming, sure-to-be-bruising price war.

[Update, July 16, 11 am. In its announcement for the new Core 2 Extreme QX6850, Intel has dropped the first details of its pricing moves. The QX6850 will be $999 in 1,000-unit tray quantities. The QX6700 will drop from its current $999 to $530. No word yet on the Q6600 or QX6800.]