A year after larger rival Intel launched its first 45-nanometer processors, Advanced Micro Devices brought out its first 45nm quad-core (where each core operates as an independent computing device on the same chip) server chips, code-named Shanghai, for use in servers - the computers on which corporate networks run.

In fact, AMD waited until Shanghai was in distribution to make a formal announcement.

AMD was able to launch Shanghai ahead of schedule, unlike the ill-fated Barcelona series. The first nine Shanghai processors for servers in its Opteron stable, which have been priced very close to their Barcelona equivalents, would deliver 30 to 35 per cent better performance. The new processors also consume less power than the Barcelona chips, thus reducing customers' costs and boosting efficiency.

According to AMD, the highly energy-efficient Shanghai chip automatically turns off some parts of the chip when they are not in use; it also works well with virtualisation.

As opposed to Intel's method, AMD, together with IBM, used new immersion lithography to make the leap from 65nm to 45nm.

Intel's new chip, code-named Nehalem, is due to be released on 17 November. The chip, to be sold under the name Core i7, will resemble Shanghai, ie, it will have an `on-chip memory controller,' which helps speed performance, something that AMD's chips have had since 2003 (helping them to garner business for a short while), and Intel had generally avoided.

Intel, which is expected to produce a series of chips based on the Nehalem design, may, over time, beat AMD. But, for about a year, as Intel's first Nehalem chip will be suitable for use only in single-chip computers like desktops, it will concede ground to AMD.

AMD expects Shanghai to consolidate its hold on the four-socket server space. Its 25 system vendors will be selling machines incorporating the new chip.

For some, it looks good against Intel's chips whereas for others it's more of a maintenance product. The economic slowdown is affecting both companies, with Intel drastically cutting its fourth-quarter sales forecast, and AMD targeting the financial-services companies and other large corporations with Shanghai.

AMD has also confirmed that 45nm desktop chips, code-named Deneb, along with low-power and high-performance versions of Shanghai, will be released early next year.

Since the Barcelona debacle, AMD has picked up the pieces and has said it would split off manufacturing operations to create a separate fabrication plant-to improve focus on coming up with new products.

According to AMD and IBM, their relationship is special and could only get stronger.