Intel may have upper hand in processor war, for now

Intel Corp. (Nasdaq:INTC - news), the world's largest chipmaker, had been losing market share to rival AMD, but is now believed by analysts to have stemmed losses or even gained share thanks to a raft of new products.

Meanwhile, Advanced Micro Devices Inc. (NYSE:AMD - news), which saw its sales soar in recent years as its powerful, energy-efficient processors trumped Intel's, is now struggling with outdated products and a costly acquisition.

AMD's woes were underscored earlier this week when it said that lower prices and unit sales meant that first-quarter revenue would be about $1.23 billion, 20 percent below the average Wall Street forecast.

"AMD had superior products a year to two years ago and for the first time was able to have prices above Intel's, and Intel was having to be competitive on pricing to clear inventories" said Cody Acree, an analyst with Stifel Nicolaus.

"Today, it's a reversal of those roles," Acree said. "We expect that Intel is actually gaining share and that AMD is having trouble staving that off and is having to cut prices to help make that happen."

Intel had about 74.4 percent of the market for desktop, laptop and server processors, according to January data from Mercury Research, which estimated AMD's share at about 25 percent.

When Intel reports first-quarter earnings on Tuesday, it is expected to show a net profit of $1.28 billion, or 22 cents per share, on revenue of $8.97 billion, according to the average Wall Street forecast on Reuters Estimates.

While that would be a 5 percent fall in profit from a year earlier, analysts are bracing for AMD to report on Thursday a net loss of almost $342 million, a dramatic about-face from the $184.5 million profit it posted a year earlier.

AMD plans to counter Intel in the middle of this year when it launches a new chip with four processing cores, meaning that it can handle several tasks at once.

The big question is whether the chip, known as Barcelona, will offer enough of an advantage to take more customers away from Intel.

Intel has a quad-core chip as well, but it consists of two dual-core chips stuck together. AMD says its design of having all four cores on one piece of silicon will be faster and use less energy