Intel May Drop Prices for Core i5 ULV to Push Ultrabooks
Intel may be bowing to the pressure of system vendors and reducing the price of some low-power processors to enable lower ultrabook prices.
Williams Financial Group analyst Cody Acree told clients that the process manufacturer could be dropping the tray prices of Core i3 CPUs by about $25 to $27. At this time, Intel currently offers three ULV i5 chips that sell for prices between $225 (i5-3427U) and $250 (i5-2557M and i5-2537M), which means that the analyst is anticipating a price drop of about 10 percent.
His reasoning stems from an increasing threat from AMD-based "Sleekbooks", which are hitting the price target of $700 and below much faster than Intel's Ultrabooks. Ultrabook makers have been complaining about the high cost of Intel processors preventing them from bringing down their bill of materials (BOM) and delivering on the $700 retail price goal. To achieve that goal, the BOM has to land somewhere between $500 and $550.
Acree's colleague Stacy Rasgon of Bernstein Research dismissed concerns that there is an "execution risk" on AMD's side and noted that AMD is becoming financially much more reliable, which indicates that we could once again be seeing a much more competitive AMD. Acree showed a considerable focus on Sleekbook pricing and the potential success. If he is right and AMD is able to piggyback on Intel's Ultrabook campaign with much cheaper same-class devices, Intel may, in fact, be forced bring its processor prices down and compromise on its comfortable margins today.

No really. Intel doesn't gain anything from undercutting the MacBook Air. I'd say it's more because of AMD.
wait for hasewell where intel reinvents the notebook
Not if Intel has their way.
Dropping the "BOM" get it?
Macbook Air at the same price point? Did I miss something here?
Ultrabooks are portable, not very high performance. There might be some sleek books with a quad core Trinity APU and maybe some very expensive Ultrabooks with a quad core i7, but like you said, dual-core CPUs are much more prevalent in these machines. Laptops are much easier to get with higher performance and for the money if portability is important.
One might think that tablets are a threat, but that is covered too. There will be a low end Intel tablets with Atom and a high end tablets that will essentially be an Ultrabook. There is no need to drive the price of a processor that is better than anything AMD produces down. It just doesn't make any sense. Of course, there will be price drops, because there are always price drops on processors. However, the view of the market reported here makes no sense.
dropping the price of i3 processors by $25 does not equate to a 10% discount on a $250 i5. It is a 0% change on the i5, and a larger than 10% drop on the i3 as they would be cheaper to begin with.
Keep in mind the Air uses Intel chips as well... Thus Intel doesn't really care if you buy an Air or an Ultrabook. It is simply trying to capture a portion of the market currently occupied by AMD.
You don't ask for much, do you?
Also, I don't think Intel needs to "learn" anything. They've posted record profits something like four years running now. With $12.9 billion in revenue in the first three months of this year alone, I don't think they need business advice from you.