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AMD to resist Intel price pressure next year

Claims chip giant's business model creaking at seams

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Chip company Advanced Micro Devices (AMD) said today that it is confident it will be able to resist Intel price pressure in 1999. Rana Mainee, European director of market research at AMD, conceded that it will cut prices on its products in early January but forecast that situation will change during the year. He said: "Intel is targeting AMD products with its pricing and it has lost much market share to us. As far as we're concerned, we'rre not panicking and have the volume to supply the demand. If Intel did not continually drop its prices, we wouldn't drop ours." Mainee said: "We're not in a position today to resist that [Intel's] market pressure. But sometime during 1999, we won't feel compelled to drop our prices when Intel does." He claimed that as the average selling price (ASP) is eroded, Intel has only been able to maintain its margins by internal cost cutting and streamlining their business model. "In 1999, everything comes to a head. Intel can't cut costs much further because the ASP will continue to erode. Its networking and other revenue streams won't support its microprocessor business to the same degree." But an Intel representative refuted Mainee's analysis of the market, and said that his company will continue to cut prices throughout the year, partly because of the competitive stance it is taking and partly because members of its microprocessor families will be phased out. The only place Intel is losing market share is in the US retail sector, he said. ®

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