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Will AMD Have Intel Running Scared?

There's a lot to like about Advanced Micro Devices (NYSE: AMD  ) . Once a laggard, the firm has become an innovator, especially in chips for servers. But can the brash yin to Intel's (Nasdaq: INTC  ) yang keep it up? It's certainly trying. Last Thursday, the chipmaker said it aims to grab one-third of the total chip market by 2009, up from roughly 20% today.

How will it get there? Well, management is promising a next-generation architecture for servers, workstations, and desktops by 2007, and says it will have a new mobile chip design available in the same year. Also on tap is a program for licensing its server socket designs, which would enable the creation of co-processors designed to work in tandem with AMD chips to perform specific computing tasks.

The company unveiled these plans last week, and of all the marketing-speak in the press release, I'm most interested in the new mobile architecture. I can thank In-Stat analyst Jim McGregor for that. He told me that it's clear from the announcement that AMD has been working on the new design for some time. And, more importantly, the promised innovations -- especially the inclusion of its popular HyperTransport technology for moving data rapidly through silicon -- should put pressure on Intel. "They (AMD) are doing a lot of things right," McGregor says.

Investors thus far appear to be unimpressed, with the stock down more than 4% from Wednesday's close. Color me a little less skeptical. If AMD's new mobile architecture is anything like what produced the runaway success that Opteron has become, Intel and its multi-billion-dollar Centrino franchise have a lot to fear. And a lot to lose.

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Fool contributorTim Beyersthinks the battle between AMD and Intel is finally getting interesting. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out which stocks he owns by checking Tim's Foolprofile. The Motley Fool has an ironcladdisclosure policy.

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