The four-core Shanghai proves AMD has a robust 45 nm process and gives it an edge for as much as a year in servers supporting four or more chips. However, Intel will gain a significant advantage with its Nehalem server processors coming late next year that support up to eight dual-threaded cores for similar high-end systems.

Shanghai is essentially a 45 nm shrink of AMD's delayed quad-core Barcelona design. By contrast, Nehalem chips integrate a memory controller and Intel's new high-speed Quick Path Interconnect, similar to the architecture of AMD's Opteron CPUs.

"Nehalem is a big leap forward for Intel compared to Shanghai which is a somewhat improved shrink of AMD's previous chip," said Nathan Brookwood, principal of market watchers Insight64 (Saratoga, Calif.).

A panel of high-end system integrators said with the Shanghai debut they expect to see rising use of AMD processors. But they predicted the server chip market will continue to be a heated one with Intel and AMD trading off leadership in different sectors over time.

Brookwood said he believes AMD's server market share will trend up slightly in the short term with Shanghai. However, Ben Reitzes of Barclays Capital projects AMD's market share in PC processors overall will steadily decline from 22.2 percent last year to 17.9 percent in 2010, mainly due to Intel's growth in mobile CPUs with its Atom chip.

Reitzes is one of several analysts foreseeing a slowdown in the overall PC market. He projected PC processor sales could decline six percent in 2009 due to the souring economic climate. The server CPU market will be flat next year, he projected.

Craig Berger, an analyst with FBR Research, cut his estimates for PC sales as well as Intel's and AMD's earnings in the current quarter.