Intel's Core 2 Quad Q9650 processors are now priced at US$316, a 40 percent drop from December.

Other Core 2 Quad chip prices were cut between 16 percent and 20 percent.

Intel also cuts prices on several of its other processors, including some of its Xeon chips for single-socket servers and older Pentium and Celeron microprocessors for both desktops and laptops.

Report says that bad economy drives the company to slash its processors' price to compete with its counterpart in the industry.

For Intel, this combination of different economic factors means that the company has more chips on hand that it can sell, and reducing prices is one way to cut the amount of inventory in both its own channel as well as the channels that supply PC vendors with processors.

Intel's president and chief executive officer Paul Otellini said that the economy and industry are in the process of resetting to a new baseline from which growth will resume.

While the environment is uncertain, our fundamental business strategies are more focused than ever Paul said.

Intel will continue to extend its manufacturing leadership, drive product innovation, develop new markets and implement operating efficiencies that have already taken more than $3 billion out of our ongoing cost structure since 2006, He added.

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