Intel Answers Back in Chip War

Formerly known by the code names of Conroe (for desktop PCs) and Merom (for laptops), the Core 2 Duo completes a refresh of Intel's microprocessor product line, which accounts for the bulk of the company's sales and profit.

Last month, Intel released the first installment of the product refresh when it introduced the Xeon 5100, a new microprocessor targeting the lucrative market for corporate servers.

Intel's new chips are all based on a new microarchitecture and feature 65-nanometer circuitry, the most advanced in the industry. The result, says Intel, are chips that are designed from the ground up to offer power efficiency and take advantage of the dual processing cores that are the norm for today's PC microprocessors.

According to Intel, the desktop version of the processor, which features 291 million transistors, performs 40% better than the previous generation of desktop chips, while consuming 40% less power.

AMD was the first company to focus on the merits of energy efficiency and dual cores in processors, forcing Intel to play catch-up. Over the past year, AMD has seen it share of the worldwide PC microprocessor market rise from 17% to 21%, according to market research firm Mercury Research.

And AMD is investing billions of dollars in R&D and manufacturing facilities to achieve its goal of capturing 30% of the market within the next couple of years. On Monday, AMD said it would buy graphics chipmaker ATI Technologies(ATYT) for $5.4 billion in order to offer PC makers a complete chip solution.

But a fierce price war being waged by both companies is taking a toll, as bleak financial reports from Intel and AMD earlier this month made clear.

Last month, Intel announced it was selling off its handheld and communications processor businesses to Marvell Technology(MRVL) for $600 million. The company has also announced that it will lay off 1,000 managers and hinted at further possible headcount reductions.

Shares of Intel finished regular trading down .17%, or 3 cents, at $17.47.

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