Advanced Micro Devices on Thursday took a step toward delivering its next-generation Phenom processor, launching graphics cards that will work with the upcoming processor to provide better graphics.

The next-generation Phenom quad-core processors, due out next week, are part of the "Spider" platform, which uses cards, the processor, and a chip set in one platform to deliver better graphics and performance per watt, along with improved high-definition video.

The Phenom launch is part of the promise AMD made when it acquired ATI last year to deliver chips that enhance graphics capabilities. After acquiring ATI for $5.4 billion, AMD said it would work on a chip code-named "Fusion," which will integrate a GPU (graphics processing unit) and CPU on a single die. Fusion is expected to be delivered by late 2008 or early 2009.

Though Spider has separate parts and doesn't combine a graphics processor and CPU on a single die, it is moving toward delivering Fusion, said Rick Bergman, senior vice president and general manager of the graphics product group at AMD.

The two new cards are the ATI Radeon HD 3850 with 256MB of memory, selling for $179, and the $219 ATI Radeon HD 3870 with 512MB of memory.

The graphics cards support Microsoft's DirectX 10.1 specification, which enhances overall image quality on PCs. DirectX is the primary interface responsible for rendering multimedia, including game images and video, on Microsoft platforms. It also renders better high-definition video with support for UVD (Unified Video Decoder), which results in better HD DVD and Blu-ray images, AMD said in a news release.

CrossfireX technology allows up to four graphics cards to work together to enhance graphics performance in a system, Bergman said. That allows scalability in graphics performance and saves users from investing in graphics chips in the future, Bergman said.

Since acquiring ATI, AMD has recorded four straight quarterly net losses, weighed by related costs and charges.

The acquisition was viewed as a potent weapon in AMD's attempt to dent Intel's domination of the x86 processor market. Instead, AMD has lost ground in the processor market to Intel, and ATI's market share in the discrete graphics market has been hit by manufacturing problems and bad timing in bringing chips to market, analysts have said. Competitors such as Nvidia and Silicon Integrated Systems stepped up by shipping graphics chips on a timely basis, taking market share away from ATI.

"AMD feels that because of the close coupling of the GPU people with the CPU people, they can bring a better overall platform experience," said Jon Peddie, president of Jon Peddie Research. Both Intel and Via have failed at delivering a combined graphics processor and CPU platform, with Intel killing its Timna project in 2000, and Via failing with its Matthew microprocessor project.