Intel Unveils Xeon Server Chip Ahead of Schedule

Intel Corp. on Tuesday introduced a version of its Xeon server chip five months ahead of schedule to fight market share losses to Advanced Micro Devices Inc.

The chip is designed for computers that run corporate networks and websites and use four or more processors.

It offers twice the performance of its predecessor and tops Advanced Micro’s Opteron chip in some tests, said Tom Kilroy, co-head of Santa Clara, Calif.-based Intel’s business computer division.

Intel’s new microprocessor is aimed at tackling Opteron in its most successful segment, computers with four processors. Led by gains in that area, Advanced Micro grabbed 26% of the market for servers that use personal computer chips in the second quarter, more than double its share a year earlier, according to Mercury Research.

“We’ve lost market share more significantly in this space,” Kilroy said. “We’re optimistic that many customers that used to buy Intel because of the best performance will come back to us.”

An upgrade of the older Pentium 4-based model, the Xeon has more memory built onto the processors to help speed up performance.

“This product is a good product but it’s not good enough to give them back the technology lead and gain share back,” said Eric Ross, an analyst at ThinkEquity Partners in New York. Server makers including IBM Corp. have already decided to use Advanced Micro chips in as much as 30% of their computers, he said.

Intel shares rose 30 cents to $19.68. Shares of Sunnyvale, Calif.-based Advanced Micro rose 48 cents to $24.40.