HONG KONG - Advanced Micro Devices Inc., the world's number two maker of microchips for personal computers, will supply China's second-largest PC maker with chips, scoring its latest victory in a market share battle with bigger rival Intel.

Under an agreement signed on Thursday, Founder Technology (600601.SS) would introduce desktop computers based on the AMD64 processor in China next month, AMD said in a statement.

A technician from Advanced Micro Devices is shown displaying a wafer to the media in the German city of Dresden, in this May 17, 2004 file photo. AMD, the world's number two maker of microchips for personal computers, has sealed a deal to supply China's second-largest PC maker with chips, scoring its latest victory in a market share battle with bigger rival Intel. [Reuters]

AMD and archrival Intel have been duking it out in China -- now the world's second-largest PC market -- for the past two years, with underdog AMD rapidly gaining on the bigger Intel.

AMD scored a victory in 2004, when it signed its first deal to supply chips to Lenovo Group Ltd. (0992.HK) -- the world's third-largest PC maker and China's dominant player.

The US firm typically competes with better-known Intel by offering comparable chips for less.

AMD and Founder plan to extend their tie-up into the notebook and server markets in the near future, according to the statement.

Founder sold 2.5 million PCs in 2005, and commands about 12 percent of the Chinese market, according to IDC, versus about 33 percent for Lenovo.

But PC sales at Founder grew nearly 34 percent in the second quarter of this year from a year earlier, it said.

Intel expects China to overtake the United States as the world's biggest PC consumer by 2010. The chip giant still dominates the China market, with an estimated three-quarter share, while AMD controls about 18 percent, according to Chinese media and official sources.

But that marked a major improvement for AMD from just three years earlier, when it held 5 percent versus Intel's 90 percent.

Shares of AMD on the New York Stock Exchange rose 17 cents to $25.24 in morning trade on Friday.