Intel expects CPU prices to fall now that AMD’s Ryzen is here

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Intel is forecasting a “slight decline” in its premium chip prices for the remainder of the year, and AMD’s Ryzen chips could have played a part in that.

Prices of Intel’s chips in both desktops and laptops went up in the first quarter. That helped drive up the quarterly revenue for Client Computing Group—which deals in PC chips—to $8 billion, which was up 6 percent compared to the same quarter last year.

But Intel’s PC chips now face serious competition from AMD’s new Ryzen chip, which was released last month. Ryzen chips offer competitive performance, and are priced significantly lower.

AMD’s fastest Ryzen 7 1800X chip—targeted at gamers—has eight cores and is priced at $499. A comparable chip like Intel’s Core i7-6900K is priced at $1,089. Intel’s fastest gaming chip is the Core i7-6950X Extreme Edition chip, which is priced at $1,723.

During an earnings call on Thursday, Intel’s CEO Brian Krzanich sidestepped a question on whether Ryzen had any role in the projected chip price declines. He said the market dynamics were a reason. 

For more than a decade, AMD’s cheaper processors were considered inferior to Intel’s chips on performance. PC makers dropped AMD from their product lineup, but are now partnering with the chip maker on Ryzen, said Jim McGregor, principal analyst at Tirias Research.

“AMD is offering a competitive part, and their price is significantly lower than Intel’s,” McGregor said.

That is attractive to PC makers, who want to increase their margins on PCs.

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