This is a big week in semiconductor history. First, Advanced Micro Devices (NYSE: AMD) released a long-awaited suite of server-class processors on Monday, suddenly making AMD's finest chips truly competitive with the imperative market presence that is the Intel (Nasdaq: INTC) "Nehalem" architecture. And just when balance was restored in the chip-making universe, Intel struck back with its own server chip update, formerly known as the Nehalem-EX.

What's new?
AMD's new offerings include the design long known under the codename "Magny-Cours." Say that out loud, and you will get exactly what the chip is about: many cores. The Istanbul architecture, which was AMD's biggest, baddest server chip until last week, crams the functionality of six processors onto a single chip. That's a six-core processor. Magny-Cours essentially puts two Istanbuls together with some fancy footwork to make the multitude of processor cores work better together. Now you have 12 cores.

Under some workloads such as high-performance number crunching and data mining, AMD's new chip beats the pants off Intel's old Nehalem, according to the tech reviewers at Anandtech. If you're building cloud computing farms or otherwise indulging in virtual computing on a large scale, the rivals run neck-and-neck. However, Intel's new chip expands Nehalem up to eight cores, and Intel claims to have tripled the average performance of this product's predecessor on "common, leading enterprise benchmarks."

What's next?
Both updates were welcomed with open arms as system builders such as Hewlett-Packard (NYSE: HPQ), Dell (Nasdaq: DELL), and Silicon Graphics International (NYSE: SGI) all announced new systems built around chips from both sides of the storied rivalry. Enterprise-software designers including VMware (NYSE: VMW) and Microsoft (Nasdaq: MSFT) also expressed enthusiasm and support for all of the goodies.

Intel appears to aim for bigger game than AMD here: The AMD chip is extremely competent and cost-effective for smaller systems, while Intel's perhaps most important update is support for up to 256 chips (or 2,048 cores) per system. Each product should find a comfortable niche, and these refresh cycles are coming when businesses are investing in IT infrastructure again.

Server chips come with fat margins and often introduce features that trickle down to desktops and laptops later on. This week's announcements from AMD and Intel pave the way for strong and profitable sales in coming quarters -- but don't expect to see the impact in their respective quarterly reports two weeks from now. The chips rolled out right as the quarter ended and should start adding to the bottom line in the second quarter.

Fool contributor Anders Bylund owns shares in AMD, but he holds no other position in any of the companies discussed here. Intel and Microsoft are Motley Fool Inside Value recommendations. VMware is a Motley Fool Rule Breakers pick. The Fool has created a covered strangle position on Intel. Motley Fool Options has recommended a buy calls position on Intel. Motley Fool Options has recommended a diagonal call position on Microsoft. Try any of our Foolish newsletter services free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.