Intel Drops Price, Forges Major Deal

It was a brawl in the computer chip business on Monday.

In a two-fisted assault on the chip market, Intel Corp. slashed prices of its Pentium microprocessors and bought chip maker Chips & Technologies Inc. in a $420 million deal, its biggest acquisition ever.

AMD quickly responded with its own price reductions, saying it would continue its strategy of selling its comparable processors for at least 25 percent less than Intel products.

Further heightening the competition, National Semiconductor Corp. announced it would buy Cyrix Corp. for $550 million in a deal that would give Cyrix added muscle to sell its computer chips against Intel’s.

Intel, in its purchase, plans to use Chips & Technologies chips to improve the way video and three-dimensional graphics look on portable computers.

Intel’s actions demonstrate its resolve to sustain its dominance in its mainstream Pentium microprocessors, which are the brains in 85 percent of the world’s personal computers.