Advanced Micro Devices (AMD) mainly competes with Intel Corporation (INTC) in the server processor market. By our estimates, server processors constitute around 20% of AMD's stock price.

AMD's market share in server processors was at its peak in 2006, at around 25%, driven by the success of its Opteron series of processors. But very soon Intel regained its lost share by introducing the Xeon processor and releasing upgrades and newer products in the following years. AMD's loss was compounded when it was late in its launch of the Barcelona chip in 2008.

Mobile chips leader Qualcomm (QCOM) is planning to launch a variety of 'augmented reality' software for use in different consumer applications, according to Bloomberg/Businessweek.

Qualcomm wants to drive demand for its powerful processors that can handle high speed computing tasks for mobile devices. To do that, it intends to promote processor intensive augmented reality applications. Augmented reality aims to aid consumers with what they see. By pointing the phone's camera to objects and scanning them, the application can then identify them in the database, and find relevant material.

Tuesday, chipmaker Xilinx (XLNX) announced that it was cutting its current-quarter (third quarter) revenue forecast thanks to weaker-than-expected sales to some of its larger communications customers. This announcement comes during a series of quarters in which the company has seen record sales, thanks to rising demand stemming from a perceived economic rebound.

One analyst calls this news, "evidence of a cyclical inventory correction that we'd been expecting and have talked about previously." Nevertheless, the same analyst said that it could take longer than Xilinx had previously estimated for inventory to come back to better levels.

True entrepreneurs will go to any length to get their companies off the ground. And, they're known for accepting the consequences of the risks they take. Some businesses never make it to launch, never bring in a dime, never lead to that killer IPO. In even rarer cases, these adventures can put two people behind the defendants' table on charges of corporate espionage. Lan Lee, an American, and Yuefei Ge, a Chinese citizen, allegedly swiped computer chip blueprints and tried to gain Chinese government support for a startup using these illicit goods. Now, they could face up to 65 years on charges of corporate espionage.

National Semiconductor (NYSE: NSM) reported first-quarter earnings on Thursday after the bell. Net sales came in at $314 million, and net income was 13 cents per diluted share. According to our earnings preview, that 13-cent profit beat analyst expectations by a whopping six pennies. I'll tell you, I always enjoy when a company can beat by a little more than the boring penny. The top line also went beyond projections. The call was for roughly $300 million in sales.

Although these numbers represented steep drops when compared to year-ago data, it should be noted that, on a sequential basis, National Semiconductor showed significant improvement. Gross margin went up sequentially on better product mix and a benefit from a plant closing in China.

Late yesterday, Marvell Technology (NASDAQ: MRVL) reported a lower second-quarter profit, thanks to a large drop in sales amid struggles throughout the chip sector. That said, the company did vault higher after its announcement, thanks to its sales forecast.

The chipmaker reported second-quarter earnings of nine cents per share, down from 11 cents per share a year ago. Adjusted quarterly income checked in at 18 cents per share. Quarterly revenue slipped to $640.6 million, which was down from $842.6 million in the second quarter a year ago. Expectations called for earnings of 13 cents per share on revenue of $615 million.

Texas Instruments (NYSE: TXN), whose colleagues include Qualcomm (NASDAQ: QCOM), Advanced Micro Devices (NYSE: AMD), and Intel (NASDAQ: INTC), gave shareholders quite a boost in morale on Monday. The chip company issued a nice outlook for the bottom line.

Here are the stats. Net sales in Q2 should come in between $2.3 billion and $2.5 billion versus the old guidance of between $1.95 billion and $2.4 billion. The bottom line should come in between 14 cents per share and 22 cents per share, versus previous estimates of between 1 cent per share and 15 cents per share.

Advanced Micro Devices (NYSE: AMD), the arch competitor of fellow chip maker Intel (NASDAQ: INTC), continues to be nothing more than a short-sale candidate. Its Q4 was horrible. Net sales nosedived 33% on a year-over-year basis, coming in at roughly $1.2 billion. On a GAAP basis, the net loss from continuing operations was $2.32 per diluted share versus $2.24 per diluted share in Q4 2007. According to this source, on an adjusted basis (which excludes write-downs related to the ATI transaction), the loss was $0.69 per share, and that missed Wall Street's expectations by a wide amount. The call was for a loss of $0.54 per share.

AMD is in a terrible state. Sure, it's not necessarily all management's fault. What can they do about the sinking economy? Not much. Demand is down and everyone is going to have to live with it. The press release talks about lack of visibility and concentration on restructuring. That translates to "we're doing everything we can just to make it through the tough times." Gross margins, both on a GAAP and a non-GAAP basis, have been challenged. Considering the bad news recently reported by both Intel and Microsoft (NASDAQ: MSFT), it's not a stretch to say that shares of AMD are heading lower.

Although I alluded to shorting AMD at the top of this piece, I should point out that shorting is a risky proposition and not for everyone. My main point in saying this is that I believe the situation is so dark right now in this sector of tech that 52-week lows may certainly be retested. And then there is the price war between AMD and Intel that this article mentions. That's an important issue to consider when thinking about both of those companies. The worst of times brings out the fiercest of competitive natures. Since AMD's brand is arguably not as strong as the Intel name, one can see why it would be best to avoid AMD's stock at all costs.

Disclosure: I don't own any company mentioned; positions can change at any time.

When Intel (NASDAQ: INTC) was developing its new and powerful i7 chip, the economy was peachy. Today, it finally launched the microprocessor chip, but into a completely different economic environment, which may mean the payout from the chip will take years.

Intel does not seem to be concerned by the timing, but perhaps it should be. According to The Wall Street Journal, "You recover from a recession with tomorrow's products, not today's," said Sean Maloney, Intel's executive vice president and chief sales and marketing officer.

Maloney's assessment may be flawed. After years of being behind Intel in product development, AMD (NYSE: AMD) seems to be finally catching up as it launches new chips of its own. If i7 sales are undercut by the tech recession, when the industry recovers, Intel will be faced with tough competition while it rebuilds its sales and earnings. In a strong economy it could build a market share lead during a period when the entire market is expanding. In a downturn, facing strong competition, its revenue could be significantly undermined

Intel also has to face a long payout cycle for the i7, which could hurt earnings. After many quarters of R&D costs, the world's largest chip company probably assumed it could recoup its investment in the i7 in a fairly short period of time. Now, that short period has become unpredictably long.

Intel's casual attitude about the i7 being an important product during a recovery is a smoke screen to hide the fact that its ROI plans have almost certainly been damaged.

Douglas A. McIntyre is an editor at 247wallst.com.