Intel took the axe to its microprocessor prices over the weekend as the world’s largest processor vendor prepares to release a volley of new products in the weeks ahead.

That means cheaper PCs, but the Intel marketing machine will start its scare mongering noises about the dangers of not having a future proof (and inevitably more expensive) system.

In the desktop market, Intel cut the price of its high-end Pentium III processor by as much as 31 percent, and its Celeron processor by up to 15 percent.

Prices on Intel's mobile Pentium III chips were reduced by up to 34 percent, while the price of a mobile Celeron dropped as much as 44 percent, according to information on the company's Web site.

The price cuts took effect May 28, and apply to chips bought in 1,000-unit quantities. Intel said the price cutting moves are part of the company's regular pricing activity.

The cuts come as both Intel and its chief rival AMD prepare to release a shower of new, faster processors in the weeks ahead.

By the end of next month, Intel plans to release new desktop Celerons running at clock speeds of 633MHz, 667MHz and 700MHz, sources said. Intel's current fastest Celeron tops out at 600MHz.

For notebook users, Intel has said it will raise the speed of its fastest mobile Pentium III to at least 750MHz by the end of the first half of this year, up from 700MHz today. The chip's clock speed should increase to 850MHz or greater in the second half of this year.

Also next month, Intel is expected to release a new chipset called the 815. A chipset is a collection of chips that surrounds the main processor in a PC.

The 815 includes a 133MHz system bus, compared to 100MHz on comparable Intel chipsets today, as well as an optional integrated graphics chip that should help PC makers offer customers a greater choice of graphics configurations.

Not to be outdone, AMD will look to upstage its larger rival with the release of Duron, its new chip for sub £700 PCs and Thunderbird, an improved version of its high-end Athlon processor. Both of these processors are expected to appear in the next four to six weeks.

AMD is keeping a tight lid on Duron's details, including its clock speed and price.

Formerly codenamed Spitfire, the chip will have a 200MHz front-side bus, AMD's 3DNow technology, and an on-chip Level 2 cache, all of which should help enhance its performance, AMD has said. Duron is a Latin word that translates roughly as "long lasting."

Thunderbird, meanwhile, tweaks AMD's existing Athlon processor by moving the Level 2 cache onto the same silicon die as the processor -- a move that should boost performance.

AMD is keeping quiet about what Thunderbird's clock speed will be; the company's current fastest Athlon processor runs at 1GHz, the same speed as Intel's fastest Pentium III.

Clock speed is only one measure of processor performance, which also depends on a host of other variables. Consumers tend to pay closest attention to the megahertz figure, which has sparked an intense rivalry between Intel and AMD to offer the "fastest" chip.

Later this year, Intel plans to launch a new PC processor codenamed Willamette, which it says is based on a completely revised architecture from today's Pentium III. Intel has said it will debut the processor at a clock speed of 1.4GHz.