Ultrabook makers pushing Intel for 50% discount on CPUs

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Intel is pushing hard to make "Ultrabooks" hot-selling items in the upcoming holiday season, investing in manufacturers that innovate on hardware design and providing a bill of materials to show that the $1,000 price point can be reached. Many of its OEM partners are worried about missing out on their profitability marks, though.

According to a DigiTimes report, notebook vendors are asking Intel to supply Ultrabook CPUs at 50% discount to help increase their margins. The chip giant apparently rejected the proposal and is only willing to provide 20% discounts to first-tier notebook players, reducing the Core i7-2677 to $317, i7-2637 to $289 and i5-2557 to $250. That's still at least a quarter of the total cost of an Ultrabook, and considering these machines will likely carry solid state drives to comply with Intel's instant-on requirement, it's easy to see why OEMs are asking for a bit of leeway.

Intel itself currently gets 60% gross margins on its processors, but the company is reportedly worried that further cuts would depress prices for its mobile CPUs across the board, impacting its own profitability.

In the next 18 months, the company is hoping to eventually have really thin, really responsive systems down to truly mainstream price points of around $600, and by that time Intel predicts the category will account for 40% of the notebook market. In the meantime slightly larger computers are already available at affordable prices; it remains to be seen if Intel can carve out a market out of Ultrabooks and if OEMs will play ball when it comes to pricing to get it off the ground.

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