The first Y2K microprocessor is ... a Celeron. Intel introduced Tuesday a 533MHz Celeron processor for value-priced desktop PCs. The chip, available now, offers PC users additional performance at little extra cost. A number of PC makers are expected to offer it in their machines. It is also a turning point for Intel. The new chip is an extension of Intel's current Celeron processor line, meaning it is manufactured using Intel's 0.25 micron process and features 128KB of integrated Level 2 cache and a 66MHz system bus. But it's the last such chip before the company moves Celeron to its 0.18 micron manufacturing process, which is now used for the Pentium III. The process change will bring additional performance "headroom" to Celeron, meaning Intel will be able to raise the clock speed of the chip over the next few quarters, while it lowers cost, because the process also yields a greater number of chips. Headroom will be the key to staving off competition, Intel says. The company is battling a resurgence by Advanced Micro Devices, whose K6-2 chip is popular in value-priced computers. AMD is already shipping a 533MHz K6-2 chip, announced last November, along with its 750MHz Athlon processor. It has plans to deliver higher clock speed K6-2s as well. "We're not going to sit on our laurels in 2000. We're going to keep our foot on the gas pedal," said Pat Gelsinger, vice president and general manager of Intel's Desktop Products Group. "We've lined up our products so that we can keep introducing them to be proactive in this space. We want to have the products at volume sweet spots at or ahead of the competition." Those sweet spots, in general, are PCs sold at retail or direct to consumers at $600 (£360), $800 and $1,000 price points. "In the Pentium space, it's 'run as fast as you can,' " Gelsinger said. However, "In the value space it's different. The customers aren't demanding the best. Instead, you're always trying to provide the best value, which is the right megahertz at the right price points." Intel, in order to keep up with the market, has been introducing new Celeron chips at least once per quarter, starting in the last half of 1999. Early in the year, it introduced chips even more quickly in an attempt to catch up with AMD in market share. "We'd expect to be similar to that in 2000 (with quarterly clock speed upgrades), but we've built our product line so we can be more aggressive. If we need to be more aggressive, we can be," Gelsinger said. Later this quarter Intel will make the transition to the 0.18 micron production process for Celeron chips, sources said. The first will be available at 566MHz, sources said, but will still offer a 66MHz system bus. Intel may not move to a faster 100MHz bus right away, for reasons including controlling Celeron's cost, sources said. While Intel introduces faster Celerons, AMD will also make the transition to 0.18 micron with a new version of the chip, called K6-2+, which will debut at about 550MHz this quarter. Take me to the Intel PIII special