The last year has not been kind to AMD. Its 65nm Barcelona processors arrived several months late, and were already obsolete in many ways when compared to the Intel offerings at the time. To make matters worse, the Barcelona chips were also buggy, making the tardy offering even less desirable to consumers and PC manufacturers. All of this built up to AMD’s $1.2 Billion loss in Q2 of 2008, the same quarter Intel saw record-breaking gains.

Now, in an effort to right itself in the CPU market, AMD has begun manufacturing its next generation of processors. Shanghai, a 45nm quad core processor, will be available by the end of 2008, beating original expectations. As per its usual strategy, Shanghai will be available in server processors first, followed shortly by desktop varieties.

In order to gain ground on Intel in performance, these new Shanghai based chips will have three times more cache (6MB total) than previous processors, as well as the third iteration of HyperTransport. AMD claims these additions will boost performance by as much as 20 percent while lowering power consumption. Following the release of the Shanghai processors, the 45nm Deneb desktops processors will hit store shelves in early 2009, followed by Istanbul server processors (six-cores) later in the year.

This could be the boost AMD needs to stay competitive with the house that Moore built, but how will these new offerings compare to the six-core Xeon processors already shipping from Intel as well as the Core i7 chips expected later this year ? Only time will tell.

Check out AMD’s full plan for most of 2009 right here in an earlier report.