One of the most-publicized rivalries in the technology sector is that between processor makers Intel (NASDAQ:INTC) and AMD (NYSE:AMD). Both companies reported quarterly results last week, and I thought it would be instructive to stack their conference calls up against each other. Hence, this special two-ticker edition of "Fool on Call."

The topic on top of everybody's mind in both calls was gross margins. Is the price war over? Can you squeeze more blood out of the rocks you've given each other? Please show us where it hurts!

Intel said that the competitive pressure has shifted toward the low-end desktop processor space and away from the more lucrative notebook and server chips. The company shipped healthy quantities of its desktop chips, but at subpar selling prices, so the total revenue from that segment came in on the low end of expectations. The two less-pressured segments did very well, with total revenues up by double digits from last year in both cases.

The crosstown rival thinks it stole market share back from Intel, whether counting by units or revenue dollars. There, all three strata of the processor market delivered double-digit sequential growth, with no word on annual segment-by-segment growth figures.

Independent technology research firm iSuppli confirms AMD's market share claims, though on a rather insignificant scale that makes it a victory in the technical sense only. "Flat from last quarter" is a more fair choice of words here.

Both companies say they expect higher margins in the next quarter based on each competitor's new product introductions and increased manufacturing efficiencies. It sounds like the battle is at least cooling down a bit, though it's still early to call a wholesale ceasefire. That's good news for shareholders of both companies -- the price war leads to great deals for consumers but eats up profits for both companies.

Technology leadership
Intel CEO Paul Otellini is tremendously confident in his product lineup, including the upcoming 45nm, next-generation processor currently codenamed Penryn. "I feel pretty comfortable that if [system builders] intend to do well in the marketplace they are best served in these performance-based [multi-processor servers and high-performance notebooks] segments using Intel," he said.

Not to be outdone, AMD's Chief Sales Officer Henri Richard said that "you will see that the performance of Barcelona in its 68-watt version is extremely satisfactory. Our customers can't wait to ship it. They are really excited about the opportunity." For your information, the top five system builders in the world offer both Intel and AMD machines today. That would be Hewlett-Packard (NYSE:HPQ), Dell (NASDAQ:DELL), Lenovo, Acer, and now Toshiba.

No IT manager has ever gotten in trouble for choosing Intel, but you could argue that AMD is making serious inroads in the global processor market, and that wouldn't be happening if the current crop of Athlons and Opterons were useless. They can win some benchmarks, depending on your parameters and choice of performance metrics. Penryn and Barcelona will shake that picture up considerably, and we'll just have to wait and see exactly where the new battle lines will be drawn.

Back to the future
So both rivals expect higher margins and stronger technology in the quarter currently under way. Penryn is about to pop, and Barcelona is coming in August, albeit only in a server version, with desktop and notebook chips to follow in a few months. They both look great on paper, and preliminary performance figures for each chip stand head and shoulders above the state-of-the-arts silicon available today. Like I've said before, the real prize fight is about to begin, and it's not exactly a price fight.

Intel said that its manufacturing operations have come through big time, delivering efficiency above and beyond expectations. That means $600 million in capex savings this year, without any sacrifice in product output or timeline slips. AMD is saving $200 million of capital expenses, too, but is doing so by pushing some much-needed back factory upgrades into next year.

Odds and ends
A podcast of either call would make a spiffy companion for your next jogging tour or mind-numbing commute. There's plenty going on in Silicon Valley these days.

For example, Intel officials explained the minuscule share buyback line this quarter -- $100 million is the smallest quarterly repurchase since 2003 -- by outlining the boardroom decision process behind the numbers. "We do meet on with our board quarterly, we talk about strategic projects, we talk about cash reserves," said CFO Andy Bryant. "We set a cash target, we protect the dividend, we pay the dividend and then buy backs are almost a drop off from that equation; not exactly, but close. If our business continues to generate cash either we have to come up with some really good ideas fast or you would see us start to buy back some more."

And AMD kept coming back to its Texas Instruments (NYSE:TXN) -esque "asset-light" manufacturing plans, which were said to be shaping up nicely, but management declined to offer much detail because of competitive concerns. A secret is a secret until it isn't anymore, you know. CFO Bob Rivet wanted to remind us, though, that the company already uses third-party manufacturing "from the TSMCs (NYSE:TSM) of the world" for its older, lower-end processors, as well as for much of its graphics lineup.

Final Foolishness
This quarter looked better than the last, no matter where you look, or for whom you're rooting. Intel is acting like the market leader that it is, and AMD is doing the things a scrappy underdog needs to do, with little to fault on either side. OK, so I have my nitpicks: Intel could let up on the pricing pressure and let both itself and its competitor reap fat stacks of extra cash -- the market demand looks to be there, and customers really are getting good deals under these conditions. And who could feel entirely comfortable with a balance sheet like AMD's?

But when all's said and done, I think we'll have an AMD way stronger than the 11.4% market share it has today, although nowhere nearly big enough to kill or maim mighty Intel. There's room for more than a single monopolist in this massive global semiconductor market, and things will eventually settle into an equilibrium -- an uneasy truce. By then, AMD shareholders will have been richly rewarded for their courage and patience, while it's up to Intel management to make its owners happy somehow.

The rabbit hole goes much deeper:

Intel and Dell are two of our Motley Fool Inside Value picks; Dell also appears in the Motley Fool Stock Advisor newsletter.

Fool contributor Anders Bylund owns shares of AMD and Taiwan Semiconductor, but holds no other position in any of the companies discussed here. He's currently an all-star CAPS player, ranked 3,852 out of more than 61,000 players. You can check out Anders' holdings if you like, and Foolish disclosure is your best weapon in any Street fight.