Following Intel Corporation with reducing the prices on the Celeron processors earlier today and the Pentium 4 price cut that happened on the 20^th week, Advanced Micro Devices lowered the prices of its AMD Athlon XP processors on Monday.

The reduction is not really aggressive, but still a very substantial one since we now can get very fast and powerful Athlon XP processors for a not very high price. Probably AMD makes its CPUs to be more attractive for end-users who plan to acquire an Intel Pentium 4-based platform with 800MHz Quad Pumped Bus and the Hyper-Threading technology support.

Both Intel and AMD are in a very fierce competition these days. Sometimes Intel can offer higher performance, sometimes AMD provides more speed and power, however, the main battle is not about the speed, but about the price. As you see now, AMD is able to sell its Athlon XP processors cheaper compared to the Pentium 4 chips, though, its lower-end CPUs cost exactly the same price as the Celeron microprocessors.

The price war may eventually lead to lowering revenues and eroding gross-margins of both companies. I wonder how long this may last?