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Intel on Monday began shipping its first “chips with two brains” for servers running with two processors inside.

The world’s biggest chipmaker said its new product, which trails a similar offering by its rival Advanced Micro Devices by several months, would offer a 50 per cent improvement in performance.

Its dual-core Xeon processor for dual-processor servers will effectively provide four machines or eight threads for a computer to divide its workload and offer better performance with lower power requirements.

The 2.8Ghz chip will cost $1,043 in batches of 1,000 and will be followed in the next two months by a faster version for servers with more than two processors.

Intel has been losing market share to AMD in recent months in the “x86” server segment due to its rival’s technological lead. Mercury research reported AMD’s share increased from 7.4 per cent in the first quarter to 11.2 per cent in the second, although Intel still dominated with 88.8 per cent.

The dual-core Xeon was due to appear in the first quarter of next year but has been brought forward due to demand from PC manufacturers. Dell, which does not use AMD chips, will be one of the first companies to offer the new Xeon.

Intel is promising a greater range of dual-core processors, codenamed Bensley, in the first quarter of next year that will be priced the same as single-core chips and feature smaller 65 nanometre technology.

”It’s clear the market is forcing Intel to respond to AMD and Intel is betting its success on another stopgap solution,” said Henri Richard, AMD head of sales and marketing, on Monday.

Analysts at A.G.Edwards said AMD’s noticeable advantage in the server space was beginning to fade with the Xeon announcement.

While it had been able to charge higher average selling prices than Intel over the past few quarters in servers, there was not much room for continued AMD price increases given Intel’s pricing strategy, they said.

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