Updated from 12:11 a.m. ET

Advanced Micro Devices

(AMD) - Get Report

Monday is launching a chip aimed at the higher end of the low-power mobile market.

The Sunnyvale, Calif.-based chipmaker says its high-end

Athlon 4

-- the first of the so-called

Palomino

family of chips to hit the market -- extends battery life in high-performance notebook computers by up to 30%. The chip is currently shipping in

Compaq

(CPQ)

computers.

This marks AMD's entrance into the high-performance notebook market. Previously, the company had shipped only its lower-end chip, the

Duron

, for notebook computers. And it puts AMD up against its traditional rival,

Intel

(INTC) - Get Report

, which is already shipping low-powered chips for high-performance notebooks. The fastest Athlon 4 is a 1-gigahertz chip that lists for $425. It's aimed at notebooks that cost $1,800 or more, AMD said.

Demand for notebook computers is outpacing that for desktop personal computers, making them an attractive market for the companies that make the microprocessors that are the brains of PCs. In addition, the

hot initial public offering of start-up chipmaker

Transmeta

(TMTA)

last fall brought a lot of attention to its specialty: the use of lower-powered chips in notebook computers. The chips are attractive because they extend a notebook's battery life.

Since then, both Intel and AMD -- which are already

battling it out in the desktop market -- have gotten into the game. In the desktop market, AMD's efforts have been successful and in the first quarter, the company gained about four percentage points of market share, according to

Mercury Research

in Scottsdale, Ariz.

While Transmeta has cracked the Japanese market and its chips can be found in

Sony

and now

Toshiba

machines there, it has yet to make a deal with a major notebook maker in the U.S. market, like

Dell

or Compaq. Toshiba is expected to begin shipping notebooks with Transmeta chips in them to the U.S. market later this year.

Martin Booth, AMD product manager, said AMD's "PowerNow" technology -- what's behind the Athlon 4 chip -- uses less than 20% of the usual power. The next version of this Athlon will be aimed at the server market and is due to come out later this year. AMD currently doesn't offer a chip for servers, the large computers often used for databases or for running Web sites. After getting the chips into servers, the company will aim a third version of the chip at the personal computer market.