Intel Strategy on Display

As Intel's (INTC Quote) twice-yearly developers forum kicks into gear in San Francisco Tuesday, investors will have a twofold agenda. Not only will they key into big product pushes from the chip giant, but they'll look for Intel's strategic response to competitive hustle from rival Advanced Micro Devices(AMD Quote).

Much scuttlebutt has centered on whether Intel will demo a silicon architecture to match that of a chip already on the market from AMD. If Intel previews the chip during the conference as speculated, it would be a tacit admission that it's feeling the heat from AMD's two-for-one silicon strategy.

AMD's architecture has the capacity to crunch either 32 or 64 bits of data at a time, while Intel currently offers separate silicon for each purpose. Critics say Intel and co-developer Hewlett-Packard (HPQ Quote) screwed up by investing so much money and time in the beleaguered Itanium chip, which is optimized only for 64-bit applications. The two companies counter that the software applications will likely be built out over time, saying the chip will gain an audience as more customers start to need high-end computing.

Yet Intel may have no choice but to offer a chip that competes with AMD, whose Opteron chip has steadily gained traction among the top server makers.

Last week, even management at Dell(DELL Quote), a stalwart Intel-only shop, allowed on a conference call that the Opteron architecture is a nifty idea.

"Dell is not going to use AMD processors, so the next best thing they can do is to get Intel to accelerate the launch of its 64-bit processor," said Manoj Nadkarni of Chipinvestor.com, which offers independent research on semiconductor stocks.

Setting aside the 64-bit brouhaha, Intel will seek to promote new chip offerings geared to impress consumers, fulfilling a pledge it made at the tech industry's massive consumer electronics shindig in December. At the time, Intel said it would focus on electronic devices this year just like it did wireless computing in 2003, when, with much fanfare, it debuted the Centrino Wi-Fi chip.

"That's in keeping with a major trend we're noticing: the orientation of the desktop PC towards consumer devices," said IDC analyst Shane Rau.