To rejuvenate PC sales for the holiday season, both Intel and AMD announced steep price cuts for their microprocessor products this week. Processor price cuts are nothing new (both companies regularly review and change pricing), but the cuts have been coming more quickly in recent months as the economy continues to weaken and PC sales forecasts plummet.

Intel's price cuts are the most dramatic, hitting at the heart of the company's fastest desktop processors--the Pentium 4 line. Intel reduced the high-end 2GHz Pentium 4 by 29 percent to $562 and reduced other Pentium 4 chips running at 1.9GHz and 1.8GHz by 27 percent and 12 percent, respectively. Intel's upscale Xeon processors also saw a price reduction; the 2GHz part dropped 26 percent to $455. The company also cut prices on four of its Pentium III chips, which it will phase out soon.

Intel competitor AMD cut prices of its fastest Athlon XP chip by 12 percent, bringing the 1800+ model price to $223. AMD maintained prices for other Athlon chips, but the company reduced prices on several Duron chips.

According to Mercury Research, Intel still dominates the microprocessor field, holding more than 77 percent of the market, although this figure was roughly 80 percent at the beginning of the year. AMD has successfully fought a price war with its much larger rival, leading AMD to increased market share.

In January, Intel will release a 2.2GHz Pentium 4 chip that doubles the secondary cache allotment to 512KB.