Intel ( INTC) will attempt to expand its presence in the high-end computing market Tuesday when it introduces a powerful new processor known as Montecito.

The new chip is roughly twice as powerful as the processor it replaces, has two cores instead of one, and has much more internal memory, but consumes 20% less power and therefore runs cooler, according to Intel spokesman Nick Knupffer.

The market for Montecito, the latest addition to the Itanium line of processors, is not terribly large -- perhaps 500,000 systems a year -- but average selling prices are far higher than that of chips for mainstream servers or desktop computers, says Nathan Brookwood, principal analyst of Insight 64.

However, Intel has spent billions of dollars developing and manufacturing the Itanium line, and because the volume has been low, the company has had difficulty developing the economies of scale needed to make the product profitable.

The new chip will compete with offerings from IBM ( IBM) and Sun Microsystems ( SUNW), but Advanced Micro Devices ( AMD), which has gained share against Intel in a number of areas, does not have a significant amount of business in the very high end of the market, says Brookwood.

There's been speculation that Intel will abandon the Itanium to focus on its core businesses. But Brookwood says disengaging from Itanium might be difficult because some of Intel's best manufacturing partners use the chip and would be angry if they had to turn to proprietary offerings from another company.