Shares sold short in Intel Corp. (NASDAQ: INTC) in June rose 23% to 100.1 million. The world's largest chip company's shares are up 30% this year, while those of its rival Advanced Micro Devices Inc. (NYSE: AMD) are off over 40%.

Intel has clearly been taking back market share from AMD in both the server and PC markets. Mercury Research reported that Intel's piece of the market rose to over 80% in Q1 compared to 74% in the previous quarter. The analysis shows that some of the gain was because AMD had to dump chips in Q4 2006 to cut down inventories, making its numbers in that quarter unusually high.

Analysts believe that Intel's piece of the x86 customer base will stay above 80% after years of AMD chipping away at its numbers. AMD has had to drop prices to keep up as Intel has introduced its new Core 2 Duo products.

But Wall St. sense that momentum could swing the other way as AMD brings out its new Barcelona chip. Early figures on the performance of the chip put it ahead of Intel's comparable products in computing capacity and power consumption. Sun Microsystems Inc. (NASDAQ: SUNW) recently picked the new quad-core chip for its new supercomputer, passing over the competing Intel product.

If Barcelona is a hit, Intel's shares could move back down.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Intel Corp. (NASDAQ: INTC) is in the semi-hot seat with fellow processor manufacturer Transmeta Corp (NASDAQ: TMTA) over the technology used in its newer Core Duo processors as well as the Pentium line of processors that Intel has been known for worldwide for over a decade. Many global PC manufacturers -- like Apple, HP and Dell -- are now using the newer Intel Core Duo chips. Intel will probably, then, settle this out of court, as I doubt it wants an injunction from selling these processors that provide a good bulk of its revenue base.

The Transmeta lawsuit alleges that Intel has violated ten patents covering processor design and power efficiency techniques. The small chip manufacturer and designer is asking the court for damages, royalty payments, and an injunction barring Intel from selling infringing products. The injunction, if granted, would cover almost every heavy-hitter in the Intel product portfolio -- the Pentium III, Pentium 4, Pentium M, Core and Core 2 processors -- basically, every major processor release in the last 10 years.

Of significant note here are the patent violations that have been the hallmark of Intel processors for years; things like basic processor functions (scheduling and addressing instructions on the chip) or voltage adjustment technology that lives inside the processor and changes depending on its workload (great for laptop battery life). My question is this: what took Transmeta so stinking long here? Intel has had these technologies in its chips for years and years.

AMD sure has eaten up larger competitor Intel Corp. (NASDAQ:INTC) in the press in recent years, until just recently. With Advanced Micro Devices, Inc. (NYSE:AMD) offering superior products at lower prices in many (not all) cases, the smaller and scraggly chipmaker seems to be a consistent thorn in the side of the world's largest chipmaker, Intel. In fact, AMD's $5.1 billion purchase of graphics chipmaker ATI Technologies a few months ago was a straight-shot attempt to have a more complete chip product portfolio to put it on better footing with Intel and to offer customers more of an integrated solution. An acquisition meant as an attempt to continue picking at Intel's sores, if you will.

But, the chip giant has not stayed down. With CEO Paul Otellini's massive restructuring and layoff plan, Intel is set financially to become a much nimbler competitor, instead of the bloated bureaucracy it has become in the eyes of many. Intel has also been on the technology comeback road, with dual-core processors that are finally giving AMD's top products a run for their money. In addition, Intel looks to be first to market in a few months. By then, it it has said it will release quad-core processors to the marketplace. Just 16 months or so ago, server and PC chips had but one processing "core" per chip -- now dual cores are common and four cores on a chip are just about here. That's quite a bit of progress if you ask me.

Intel's resurgence from being down (but not out) comes from Israeli engineers in many respects, who basically created helped develop multi-core processor technology to assist the chip giant into trying to regain its overall crown in the chip business. Overall Intel has never lost the overall marketshare lead to AMD, although there have been recent periods where AMD-based systems outsold Intel-based systems at retail --but that is hardly proof of Intel's marketshare woes. Although the PC biz continues to be pronounced dead on the scene by many investors and industry pundits, don't tell that to Intel or AMD -- they are acting just like the complete opposite is happening. Hey, where there is a lack of demand, you create it -- right?

At last, the "Pentium" name is going away from the microchip and computer landscape after more than 10 years in existence. I remember having a PC powered by I think the first Intel Pentium -- a Pentium 60 (Megahertz). My, have things changed for the faster. Intel CEO Paul Otellini officially took to the stage to show off the Pentium successor, the Intel Core 2 Duo.

This new microchip architecture should help put Intel back on the performance map against smaller rival AMD, which has beaten up Intel lately with much faster chips and a kind of "underdog" status that has won it marketshare from almost every angle. When AMD announced its plans to buy video chipmaker ATI for $5.4 billion just last week, the assault is now on with Intel releasing the Core 2 Duo to challenge AMD's perceived speed advantages.

Intel needs a showstopper in the Core 2 Duo package in order to reverse some problems with aging Pentium designs (which are now retired) and to put it back on track to consistent, excellent growth. While recently axing 1,000 managers and re-arranging multitudes of its business to slash costs, Intel's timing on the new flagship consumer/business chip product could not have been better.