Intel Cuts Chip Prices by up to 53 Percent
How much is the price of high end mass-market chips actually determined by supply limitations these days?
A lot of it actually. When a new chip is manufactured it takes time to optimize the line to produce more high speed chips. You're going to produce more 2Ghz chips then you do 2.4Ghz because its so much more difficult to manufacture die that can function at high speeds. The amount of 2Ghz chips you produce vs 2.4Ghz chips is called sort yield and it determines your average selling price. To compete in the semiconductor industry your high end sort yields must be continuously increasing on pace with Moores law. Since the P4 die is so much larger then that of the P3 Intel had to upgrade its older 200mm wafer fabs to 300mm (hence the factory investments the article talks about) to keep pace. This increase in wafer size allowed them to increase the amount of die per wafer, which increases their yields. Higher sort yields allow them to lower their ASP while still maintaining the same level of profit. This also puts pressure on AMD who must now cut prices to in order to maintain its market share.
Rinse and repeat. This is nothing new and not unexpected. It's how the semi industry has always worked and will continue till we stop manufacturing ICs on silicon wafers. A textbox case of supply and demand.