Filed at 8:01 p.m. ET

SAN FRANCISCO (Reuters) - Intel Corp. (INTC.O) is moving up the introduction of its Pentium 4 processor running at 3.0 gigahertz in time for the year-end holiday season, an industry source said on Monday, as the world's No. 1 chipmaker looks to extend its lead over its nearest rival.

Santa Clara, California-based Intel, the world's No. 1 chip maker, had planned to introduce the 3.0 gigahertz Pentium 4 processor, the brains of a personal computer, by the end of the year.

In additional, Intel also is accelerating the introduction of its Pentium 4 running at 2.80 gigahertz, bringing that product rollout to the third quarter, compared with a prior introduction date in the fourth quarter.

When Intel introduces new chips, it typically drops prices on the Pentium and Celeron processors it already has on the market, and there is no reason to suspect that Intel will not again cut prices on its currently available chips when it introduces the new Pentium 4 chips.

The accelerated introductions also put Intel farther ahead of its rival, Advanced Micro Devices Inc.(AMD.N), in terms of the clock speed of its processors. By the end of the third quarter, Intel will be selling a Pentium 4 chip running at 2.8 gigahertz, compared with 1.8 gigahertz for AMD, with its Athlon processors.

Last year Intel poured $7.3 billion into capital spending, much of it on chip-making equipment that can etch smaller lines onto semiconductor wafers and for gear that can handle wafers that are about a foot in diameter, compared with the previous diameter of about 8 inches.

The new equipment allows Intel, and other chipmakers, to get more useable chips from each wafer, boosting productivity and performance while cutting costs. The dimensions on Intel's fastest Pentium 4 chips are now 130 nanometers, compared with the earlier generation of 180 nanometers.

On a conference call with analysts last week, Intel said it was on track to roll out the 3.0 gigahertz Pentium 4 by the end of the year. But continued manufacturing efficiencies are allowing it to pull in its introduction, the source said.

Intel, while it said an expected economic recovery had not yet taken hold in its markets, noted it did still expect a stronger second half, which is typical for the personal computer industry. Some 80 percent of Intel's revenue is derived from the PC market.

Rival AMD reported a large second-quarter loss, compared with a small profit from Intel, in its second quarter. However, it, too, forecast a stronger second half, even as competition remains tough.

Hector Ruiz, AMD's president and chief executive, said the recent and current environment has been the most competitive he had seen in his career. Before coming to AMD, the chip veteran worked for mobile phone and chip maker Motorola Inc.