Advanced Micro Devices on Thursday will launch Shanghai, the long-awaited, next-generation version of its Opteron server processor. Analysts say the refresh marks a critical step in AMD's struggle to regain momentum against its market-dominating rival Intel.

Shanghai is AMD's first chip built using its advanced 45-nanometer semiconductor fabrication process. The move to 45 nm brings AMD up to manufacturing parity with Intel, which has been shipping 45-nm devices for nearly a year.

The first Shanghai processors are quad-core models for two-, four- and eight-socket x86 servers. Officially called the Opteron 8000 and 2000 series, the chips have clock speeds from 2.3 GHz to 2.7 GHz and consume 75 watts of power. AMD plans to release a low-power 55-watt chip and a faster 105-watt product in the first quarter of next year. A desktop version, code-named Deneb, is scheduled for release before the end of the year.

Prices for Shanghai, which will be sold under the Opteron brand, range from $377 to $989 for the 2000 series and from $1,165 to $2,149 for the faster 8000 series. Major computer makers planning to ship Shanghai-powered products include Dell, Hewlett-Packard, and IBM.

AMD has been publicly touting Shanghai's technology advancements for months. Compared with the previous generation of Opteron chips, the new processor is expected to deliver a 35% increase in power efficiency and performance, triple the cache, and higher clock speeds. In the first quarter, AMD is scheduled to deliver HyperTransport 3, a technology that AMD claims will significantly boost communication speeds between silicon. Such advancements make Shanghai a strong candidate for powering virtualization technology that makes it possible to consolidate in a single server multiple business applications running on different platforms.

To usher a quick transition from current AMD chips, Shanghai can be plugged into the same motherboards with only a BIOS upgrade, giving customers a speed bump without a tremendous amount of effort, according to AMD.

Getting Shanghai out on time and delivering its promised capabilities are pivotal for AMD, which reported its eighth consecutive quarterly loss in October, albeit one that was significantly narrower than in the same period a year ago. Among the major moves AMD has taken toward profitability is the planned spin-off of its manufacturing operations to a joint venture with Advanced Technology Investment Co., formed by the Abu Dhabi government. That deal is expected to close early next year.

Nevertheless, selling more products is what's needed to regain a healthy balance sheet, and on that level, Shanghai is a major first step. "Shanghai is critically important for AMD, because it's the product that keeps them competitive," Steve Kleynhans, analyst for Gartner, told InformationWeek. Kleynhans believes the new product is likely to help AMD maintain its position in the high-end server market.