Advanced Micro Devices

(AMD) - Get Report

announced Monday a new low-cost, low-power processor that the chipmaker hopes will help it continue expanding beyond the PC and into handheld computers, high-definition TVs and personal video recorders.

The Geode LX is AMD's latest chip, establishing what the company says is a new level of performance and price for processors built using the popular architecture known as x86, a technology that

Intel

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developed years ago and has since become ubiquitous in the computing world.

The chip is capable of running Windows XP on a power supply of under one watt, making it ideal for a range of handheld computing devices and industrial applications. It costs $45 for the main chip and a companion processor, and it runs without a fan.

"This fundamentally changes the kinds of devices people can make," says Erik Salo, director of marketing for AMD's personal connectivity solutions group, adding that because the chip is based on the x86 architecture, it is easier to incorporate into product designs and communicates better with other electronics products.

Intel uses a different architecture for its lowest-end chips, marketed under the XScale name and built using an ARM architecture. The ARM architecture has been widely adopted outside of the computer world where low-priced processors are needed in everything from cell phones to automobiles to consumer electronics gear.

Rob Enderle, principal of research firm Enderle Group, says Intel's approach to this vast market of embedded processors represents a "strategy discord" that AMD is trying to take advantage of. Taiwan-based

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is also marketing an x86 line of processors that targets the embedded market.

Salo says 17 customers are actively working on designs using the Geode LX for products such as IP set-top boxes, networking routers, liquid-crystal wall displays, tablet PCs and personal video recorders.

Products are expected later this summer, but Salo would not be specific about the companies using the chip or sales expectations. He says customers can save six months in time by employing this chip because it allows the use of industry-standard development tools and hardware components.

AMD's Geode line of processors came from an acquisition in 2003 from

National Semiconductor

(NSM)

. At the time, the unit accounted for about $75 million of National Semi's annual sales. AMD hasn't been specific about how much revenue the line is generating, but Monday's introduction marks another significant introduction. A Geode chip is featured in the Personal Internet Communicator, the $185 computer that AMD designed.

Enderle says the resurrection of the Geode line from what it was at National Semi to what it is now is impressive. "AMD funded it and grew its potential into something that is now competitive. What was a dead technology is now revitalized."

Still, AMD's latest Geode processor will be hard pressed to meet the company's lofty goals. Enderle says that if the battle for market share between x86 chips and ARM chips were just beginning, x86 chips would win. ARM already has a hold on the market segment, however, so progress will be a tough battle.

"ARM is entrenched," Enderle says, "and it takes a long time to penetrate an entrenched market."