Intel, AMD Set for Notebook Bout

At stake for both companies is the booming market for notebooks.

"Every market is important to both those companies -- servers, desktops and notebooks," says Mike Binger, a fund manager at Thrivent Financial, who owns both Intel and AMD. "But out of the three of those, notebooks have the highest growth rate."

In the third quarter, sales in Dell's(DELL Quote) mobility division were up 38% year over year, whereas desktop sales declined 2%. At Hewlett-Packard(HPQ Quote), notebook revenue for the quarter was up 23% year over year, vs. 1% growth in desktops.

And mobile chips have become an important part of overall revenue mix. Intel's mobility division, which includes processors and chipsets, contributed one-third of the company's total revenue in the third quarter.

AMD has stated that it intends to take the lead in mobile processor market share in the next few years. A strong showing in 2006 would be a good start.