Intel Corp released its newest server chips on Tuesday, as it seeks to maintain its dominance over rival Advanced Micro Devices Inc , and prepare for an expected rise in demand.

The new microprocessors, designed to power both servers and high-end desktop PCs, are the first of Intel's server chips featuring smaller transistors that have helped the company's laptop and desktop chips push stronger performance while eking out better energy efficiency.

Intel also built in security features the company says can encode and decipher files much faster, effectively removing the encryption tax or computer performance lost due to protecting files.

The chips will be released under the Xeon product line for servers, and Core i7 for desktop computers, which Intel hopes will gain traction particularly with the entertainment and video game markets.

But the biggest opportunity rests with servers, said Intel's general manager of server marketing, Boyd Davis, where an estimated one-third of the market is running on chips made more than four years ago.

Although roughly nine out of 10 of the world's servers contain an Intel brain according to IDC, they are not the only ones vying for those potential server sales.

Patrick Patla, general manager of AMD's server division, said the company's newest chips will also offer increases in speed pushed by a dramatic redesign.

There will be no single bigger performance jump in the history of Opteron than the jump we are going to take from 2009 to 2010, he said, referring to the server chip's product name.

AMD's newest chips are due in the next few weeks. It remains to be seen how they will match up against Intel's latest chips.

(Reporting by Ian Sherr)

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