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Some System Builders Bruised Amid Chip Makers' Price Wars

Short-term pricing moves by Advanced Micro Devices have left some systems builders holding higher-priced inventory, several channel sources said.

As its processor price war with Intel heats up, AMD has been offering more frequent short-term price breaks through distribution without warning, according to three U.S. channel sources familiar with AMD's pricing moves. The result for some system builders has been inventory of higher-priced products and no price protection, the sources said.

Several system builders said AMD is slated for another round of scheduled price cuts July 23, just before Intel's planned launch of its next desktop processor, Core 2 Duo. But it's the price reductions in between the scheduled cuts that have roused their ire.

One system builder, who asked to remain anonymous, said the unscheduled price drops have left him holding a significant position with the higher-priced inventory. The unscheduled cuts also have made it difficult to effectively price custom systems for customers and, in some cases, have extended the sales cycle, he said.

For example, the system builder said he recently advised at least one customer to wait until AMD's next scheduled price cut to buy products because he couldn't guarantee the consistency of prices until that time. He was concerned that he would buy processors for the large order and AMD would pass discounts through distribution while his firm is still assembling the systems.

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