Intel Shreks AMD

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What's big, green, crude, and just spit out AMD (NYSE: AMD)? DreamWorks Animation (NYSE: DWA), that's what.

The computer animation studio behind Shrek, Madagascar, and this summer's kid-friendly hit Kung Fu Panda is replacing its fleet of 1,500 Hewlett-Packard (NYSE: HPQ) machines powered by AMD chips with Intel (Nasdaq: INTC)-backed HP systems.

Intel and AMD win and lose customers all the time. It's rarely up to them, since computer manufacturers, not chipmakers, are the ones vying for major corporate accounts. However, the allure of having DreamWorks Animation on your side looks good on your client list.

Now that Pixar is in the arms of Disney (NYSE: DIS), DreamWorks Animation is the largest stand-alone theatrical animation studio. The company's Shrek 2 reigns as the highest-grossing animated feature of all time.

Movie buffs wowed by the magic of computer-generated animation respect the sheer processing power required to spin these celluloid yarns. DreamWorks Animation is hoping to raise the bar when it releases Aliens vs. Monsters in stereoscopic 3-D next year. Intel is timing its partnership perfectly, associating itself with the next evolutionary step in animation.

AMD will be fine. Despite a seemingly endless streak of profitless quarters, the industry can't afford to let AMD buckle. Having a single microprocessor company is bad for everyone but Intel. However, AMD will need to dust itself off, make some noise, and make a big stink about landing a new prolific company. This battle's about more than powering up eye-candy systems. Image matters, too.

Smile, Shrek. The world is watching.

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