Despite an onslaught of price cuts and new products from the competition, Advanced Micro Devices was able to gain market share against Intel in the second quarter of 2006.

According to data released from Mercury Research, AMD's market share was able to increase slightly, despite PC processors shipments decreasing by 7 percent quarter-over-quarter. AMD's unit shipment increased to 22 percent, and the revenue share increased to 18 percent - at the expense of Intel.

Despite aggressive price-cutting on its Penitum line of processors, and the new products in June, Intel unit share continued to slip to 73 percent of the market, sending revenue shares down to 81 percent of the market.

Merril Lynch's Joe Osha believes Intel's new Core processors should help slow the decline, however.

With the introduction of new generation of microprocessors..., we expect Intel to regain market share in the second half of this year, he said.

All processor manufacturers felt the pinch of the PC slowdown lately, though AMD weathered the storm slightly better. AMD’s units declined by only 4 percent versus the 8 percent decline in this market space. On top of this, its relative unit share against Intel increased 1 percent.

The server market is where AMD shined, with its its Opteron X2 DP processors growing 45 percent from the previous quarter. The combined affect of all of its server chips gave AMD a healthy 33 percent of the market revenue, while Intel market share declined by 5 percent.

Intel's new Woodcrest server chip that hit shelves in June may help Intel, but not anytime soon. Experts explain that unlike desktop chips, server chips take a long time to be adopted by companies. Any gains should be realized 2 to 3 quarters from now.

AMD was not able to make much progress into Intel's strong-hold: the Notebook market. Intel's share increased from 86.3% in Q1 to 86.7% in Q2. AMD unit share declined to 13.3 percent from 13.6 percent sequentially.

In general, a look at the products and pricing suggests that Intel’s positioning in the mobile market remains solid, Osha said. The upcoming Merom introduction should help bolster that position.

Intel