Intel Corp. (INTC) has today announced the launch of a new, faster server chip that can also be used to power a high-end desktop computer. The six-core Xeon Processor 5600 series can, according to Intel, “replace 15 single-core servers with a single new one, and achieve a return on their investment in as little as 5 months.” What Intel doesn’t say is that the chip could also replace competitor Advanced Micro Devices, Inc. (AMD) with an empty chair.

AMD’s history as a competitor to Intel is long and checkered. Each company has won a few and lost a few of the many lawsuits each has filed against the other. During the last ten years, AMD has seen its position rise to virtually unprecedented heights, then sink to equally unprecedented lows. The 52-week range for AMD shares is $2.43-$10.04 and the stock is trading today at about $9.20, up more than 3% on Intel’s announcement. Intel shares are up about the same amount.

If that doesn’t compute, consider that in its announcement today, Intel said that the server market is set to take off because as many as a third of all servers are running on chips that are more than four years old. What investors are betting on with AMD is that it can ride Intel’s coattails to improved revenues and profits.

Over the past 12 months, Intel shares have put up a 50% increase in value while AMD shares are up more than 250%. Intel shares hit a new 52-week high today, at $21.98, and its market cap is nearly 20 times that of AMD.

AMD is definitely an also ran, along with just about every other CPU maker in the world. Apple Inc. (AAPL) went to Intel chips several years ago, and Sun Microsystems (JAVA) and its SPARC chips will both soon be historical artifacts. Some chip makers, like ARM Holdings (ARMH) and Nvidia (NVDA), are doing good business in areas where Intel doesn’t play.

AMD’s problems are largely of its own making and many are traceable to poor management decisions. AMD’s purchase of graphics chip maker ATI is perhaps the most egregious example. It’s hard to figure out why AMD thought this was a good deal for them.

In an effort to pay for that disaster, the company spun off its foundry operations to what is now known as GlobalFoundries for about $700 million in cash and $1.2 billion in debt relief. That helped in the short term, but over the long haul AMD has just given up too much ground to Intel and it doesn’t have the cash or the leadership to recover the ground.

When AMD uncovers its match for Intel’s newest Xeon chip, expect a yawn not a cheer. The bounce to AMD’s share price came today.

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