Advanced Micro Devices will make a quad-core chip for desktop PCs, replacing its venerable Athlon processor with the new "Phenom" design in an attempt to compete better with Intel.

The chip, announced Monday, will reach stores in the second half of 2007 and share similar architecture with the "Barcelona" quad-core Opteron server chip AMD is planning to launch in the middle of 2007.

AMD surged into the market with its original Opteron server chip in 2003, but the company began to slip back again when Intel launched its quad-core Xeon and dual-core Core 2 Duo chips in 2006, pushing the two vendors into a price war.

Now, just as AMD hopes Barcelona will convince customers to turn away from Intel's Xeon, it will position the Phenom against Intel's Core 2 Duo. The company certainly needs the help -- in April, AMD posted a $611 million loss for the first quarter, and ran so short of operating funds that it announced a plan to raise $2.2 billion by selling convertible notes to institutional investors.

AMD did not share features or specifications of the Phenom chip design, so some industry experts are withholding judgment until they see benchmark testing. But one analyst said the time is right to bring multicore computing to the masses, as consumers use more and more video, multitasking and digital media in their everyday applications.

"It's going to benefit them," said Toni DuBoise, senior analyst for Current Analysis West. "I've been waiting for their next product for some time because essentially they didn't have an answer to Intel's Core 2 Duo and that was reflected in their market performance."

Adding the Phenom chip to its line of desktop processors will allow AMD to push dual-core processing from its top-shelf desktops into the entire mainstream product family. That is a key strategy at a time when users are looking for better results from running Windows Vista and doing complex media creation, digital entertainment and multitasking, said Ian McNaughton, AMD's product manager for Athlon 64 FX products.

"Our products are no longer just math computation-type processors, but are about your experience on the PC, whether it's YouTube, BitTorrent, DVR, or dual- and quad-core gaming," McNaughton said. "There's a rising expectation; people expect their PCs to be instantaneously reactive. Waiting a minute for a laser printer to print a page is no longer acceptable. Waiting for your PC to boot up is no longer acceptable."

AMD's current line of desktop chips ranges from the high-end Athlon 64 FX to the Athlon 64 X2, Athlon 64 and entry-level Sempron. After launching Phenom, AMD will offer a high-end Phenom FX (in one or two quad-core chips), Phenom X4 and Phenom X2 (in quad-core and dual-core), Athlon X2 and Sempron.

Intel already sells chips for quad-core desktops too, such as the FX desktop model launched on May 1 by Gateway Inc. That PC uses an Intel Core 2 Quad Q6600 processor, ATI CrossFire video card and 500GB of hard drive storage, and sells for $2,099.99. But AMD claims it has an engineering advantage over Intel since its quad-core design uses a single processor die instead of Intel's approach of connecting a pair of dual-core processors, what McNaughton calls "duct-taped together dual-dual core."

"2007 and 2008 will be the years of video. It will become more pervasive in everything you do with a PC," McNaughton said. If that prediction pans out, AMD says it is ready to meet the demand with the new Phenom chip.