June 12 (Bloomberg) -- Intel Corp., the world's largest chipmaker, plans to slash the price of some processors over the next three months to regain market share from Advanced Micro Devices Inc.

The company will cut prices of its Core 2 Quad processor by 50 percent on July 22, according to an Intel document given to clients. The chips, introduced in November to run servers and the most expensive personal computers, sell for $530 each, according to Santa Clara, California-based Intel's Web site.

The move puts pressure on Advanced Micro to follow suit as the company prepares to introduce its own quad-core processors, called Barcelona and Phenom, in the second half. Last year, a price war led to a 42 percent decline in annual profit at Intel and a $166 million loss at Advanced Micro.

``Intel had lost its way,'' said Brian Piccioni, a Toronto- based analyst for BMO Capital Markets. ``But there is a problem when you wake up a giant, which is they can become fierce competitors.''

Chuck Mulloy, an Intel spokesman, declined to confirm or deny the price cuts, citing company policy not to discuss product prices until they are publicly disclosed.

Intel shares rose 27 cents to $22.20 at 4 p.m. New York time in Nasdaq Stock Market trading, and have gained 9.6 percent this year. Shares of Sunnyvale, California-based Advanced Micro fell 11 cents to $13.80 in New York Stock Exchange composite trading.

Cuts Not `Ominous'

``Especially in the PC segment, price cuts, even dramatic ones, are par for the course,'' Piccioni said. ``So this is not particularly surprising or ominous.''

Advanced Micro Chief Marketing Officer Henri Richard said last week that he was ``concerned'' that Intel would cut prices of quad-core processors and drive down overall levels in the industry.

``That's the sign that I am getting right now,'' Richard said in an interview in Taipei on June 6. ``If they are pushing quad-core unnecessarily down because they think they can hurt us by doing that, then I don't think there's an optimistic view on'' average prices.

The reduction will bring down the price of Intel's quad-core chip in line with that of its top-end dual-core processor, most commonly used in desktop and notebook computers.

Intel also told customers it plans to reduce prices of some Core 2 Duo chips by 24 percent to 32 percent on Sept. 2, according to the document. The company doesn't disclose how much of total sales the chip accounts for.

Intel, which also makes flash memory chips, computer motherboards and chipsets, got 67 percent of its sales from microprocessors in the first quarter.

Packing Power

Quad-core chips have four processors in a single package, while dual-core chips have two. Packing more processors in a chip can help computers run multiple programs at the same time.

Advanced Micro's share of the desktop processor market climbed to 26.6 percent last year, from 20.8 percent in 2005, while Intel's fell more than 5 percentage points to 71 percent, according to estimates by Framingham, Massachusetts-based research company IDC Corp.

For processors used in servers, Advanced Micro's market share more than doubled to 24.2 percent, while Intel's declined 12.5 percentage points to 75.6 percent, according to IDC.

``When Intel wants to chase market share, they make these cuts to hurt Advanced Micro directly,'' said Albert King, who owns Intel shares among the $10 million he manages as chief investment officer at Prophet Capital Inc. in Taipei.

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net

Last Updated: June 12, 2007 16:07 EDT