Intel Corp. is slashing prices on chips for desktop computers, notebooks and servers as the economic downturn cuts demand for computers.

The company cut the price of some of its higher-powered chips of up to 40 percent, Reuters reports. Intel's Core 2 Quad Q9650 chip was reduced from a list price of $530 to $316. The chip is used in desktop computers. The company has reduced prices in other Core 2 Quad chips by 16 to 20 percent, Reuters reports.

Compared to a competitor, Phenom II quad-core chips from Advanced Micro Devices Inc., are listed with a price of $275.

As for chips for desktops, Intel cut as much as 24 percent the price of its Pentium dual-core chips . Intel's prices on Celeron mobile processor were reduced by 48 percent and Xeon server chips by 40 percent, according to the source.

Intel Corp., the world's biggest chip maker, reported last week its fourth quarter net income plunged 90 percent.