The price cuts on the 2.2 gigahertz Pentium 4 follow on the heels of Intel's introduction earlier this month of its 2.4 gigahertz chip. Intel typically rolls out new chips at a price of around $560 and then drops the price of the previously fastest chip several weeks later.

Intel also cut prices on its Pentium III chips designed for notebook computers. It cut the price of its 866 megahertz Pentium III chips by 24 percent to $241 from $316, the 850 megahertz mobile Pentium III by 24 percent to $241 from $316 and on its 800 megahertz Pentium III by 18 percent to $198 from $241.

Intel also cut prices on some of its Xeon processors that are used in workstations and server computers, by 11 percent to 24 percent, and on its Pentium III chip still used in servers by 7 percent.

Intel is expected to announce a new, faster version of the Pentium 4 chip early next month. And, as Intel moves to smaller and smaller line widths on its chips and to larger silicon wafers, production costs are lowered and, overall, performance of the chips increases.

Intel is now well into moving to so-called 0.13 micron process technology and to using larger, 300-millimeter-diameter wafers, from which semiconductors are made.