AMD is fast emerging as a serious rival to Intel, which never saw competition in its overthreedecadelong history. However, with the success of x86 dualcore processor behind it, the diehard challenger might just be getting ready for launching fresh salvos in the battle for the chip industrys top slot.

Advanced Micro Devices (AMD), the David of the microprocessor industry, is slowly but surely closing in on the Goliath, Intel, whose hegemony remained unchallenged for decades, despite the presence of such small but nimble rivals like Texas Instruments. The fact that AMD was an underdog was never under doubt; however, it would pose any serious threat to the chip industry's top dog would seem quite an ambitious thought, even until recently. That perception is slowly but surely changing, as the Sunnyvale, Californiabased firm snatches market share and threatens to take away key clients. In May this year, AMD surprised the market when Dell, the world's largest PC maker, announced to source AMD's Opteron chip for its highend servers, giving a big jolt to Intel. Although such servers constitute a fairly small category among Dell's vast product portfolio, AMD's entry into Dell camp is significant given that the no.1 PC maker has not ruled out including AMD's chips in its PCs or servers in future. "Although the effect on server processor sales via Dell might be small in the near term, strong customer acceptance of the AMD brand continues to pose challenges, in our view," commented Standard & Poor's Equity Research in its recent report, which lowered Intel's 2007 EPS to $1.30 from $1.40 as well as the target price by $1 to $17. The research report also said, "We view the entry into a previously Intelonly account as a big win in a series of other marketing wins (for AMD)."

The news lifted AMD's share price by 13% while Intel's chips (read shares) were down by 5% in the afterhours trading. The worry for Intel doesn't stop here. The two firms' latest quarter results, ending March 2006, are also a study in contrast. While AMD reported another great quarter in which sales jumped by 71% on YoY basis, and operating income more than tripled, Intel, on the other hand, reported revenue downfall of 5% and a slide of 44% in operating income, during the same period. "Building on our positive momentum, we believe, we once again gained dollar market share based on strong customer demand for AMD64 single and multicore processors.

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