Intel Corp is comfortable with its chip pricing now and is working with suppliers and manufacturers to lower the cost of its new ultrabook slim PCs, a product it sees as key to reviving the traditional computer in the face of the tablet challenge.

The Santa Clara, Calif.-based company expects ultrabooks, super-thin laptops using Intel processors that are similar to Apple Inc's MacBook Air, to account for 40 percent of the consumer PC market by the end of next year.

That's a challenging target ... in order for that to happen the price has to come down, Navin Shenoy, Intel's vice president of sales and marketing and general manager for the Asia-Pacific region, told Reuters in an interview on Tuesday.

Analysts say the price of ultrabooks needs to come down to notebook levels of around $699. Acer Inc's recent model sells for $899.

At some point you'll have to be at that price point, but it doesn't have to be overnight. It takes time to engineer a cost down, Shenoy said, referring to the $699 price.

But that needs to be a cooperative effort, he said.

More work needs to happen in the ecosystem. Even if we're giving the chips away for free, we couldn't hit the price point we want to hit if we don't work with the rest of the industry.

He added that ultrabooks are insulated from the threat of an industry parts shortage as Thailand's floods shut down plants producing half of the world's supply of hard disks, because ultrabooks use solid state drives (SSDs), not hard drives.

There is nothing to affect Intel fundamentally from the floods but it will continue to watch the situation carefully he said. Intel had said last week that it had not seen a direct impact on its business from the floods and multi-sourcing and inventories would help mitigate any impact.

A likely shortage of the key component as floods threaten up to 30 percent of hard disk output could mean weak sales in the first quarter.

Last week, Intel forecast quarterly revenue above Wall Street's expectations, saying that developing countries like China are fuelling expansion and helping make up for slower growth in the United States and Europe.

(Editing by Jonathan Standing)

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