Intel slashed prices on some desktop PC processors by more than half today, raising the stakes against rival AMD, which cut prices earlier this week.

Users should see the price reductions translate into substantially lower prices for powerful desktop PCs in coming months. The microprocessor is the most expensive component inside a PC, and both Intel and AMD have cut prices on some of their most powerful chips.

Intel marked down the price of its Intel Pentium D processor, the 960 that runs at 3.6GHz, to $316 (£170), down 40 percent from $530 (£285) in early June, according to a price list published on Thursday on its website.

The company also chopped prices on some of its Intel Pentium 4 processors that support hyper-threading technology. It marked down the 3.6GHz version of the processor that has an 800MHz front side bus to $183 (£98), down 54 percent, the 3.2GHz model of the chip by 61 percent to $84 (£45), and the 3GHz version by 58 percent to $74 (£40).

Intel cut prices on some laptop processors, but none by more than 1 percent. Prices of server and workstation processors remained unchanged.

On Monday, AMD pared prices on a number of its desktop chips and some laptops. It cut the price of its dual-core Athlon 64 X2 5000+ to $301 (£162) from $696 (£374) in May. It also cut the price of the Athlon 64 X2 4600+ by 57 percent to $240 (£129) from $558 (£300).

Price competition is the latest weapon the two companies have turned to in their fight for microprocessor market share. AMD has gained on Intel over the past few quarters due to the launch of some advanced processors, but Intel has come back recently with new offerings of its own.

The world's largest chip maker today unveiled what's been billed as its most significant new processor launch in over a decade, the Core 2 Duo processor lineup. The 10 chips Intel will offer should start showing up in systems in coming months, starting with desktops in early August.

Intel's 27 July price list can be found here.

AMD's 24 July price list is here.