By continuously upgrading its production equipment to the latest technology, Intel maintains a low cost per chip of around $40, according to industry researcher In-Stat.

Although Intel sells a variety of chips, including lower-cost NOR flash memory chips and computer chipsets, its lowest-priced desktop CPU (central processing unit), one of the Celeron D series, fetches $69 while its top PC chip, the Pentium Extreme Edition 3.73GHz, sells for $999, according to Intel's latest price list, released on Sunday. The most expensive chip on the list is its premium server chip, the Xeon 3.33GHz, at $3,692 each.

The world's largest chip maker is able to keep costs low by continually using more advanced production technology. Semiconductors are carved out of large silicon wafers, thousands at a time, and better technology means more chips can be made on each wafer.

Intel has three factories using advanced 90-nanometre technology to make chips, and it will bring four factories using even smaller 65-nanometre technology on line in 2006, according to In-Stat.

A nanometre is a measurement of the size of transistors and other parts that are etched onto chips. The more transistors on a chip, and the closer they are together, the faster the chip can perform tasks.

By making the swift transition to 90-nanometre etching technology, Intel saved about $1 billion in manufacturing costs last year, according to In-Stat.

Intel could not be reached immediately for comment on this report.