In a bid to buck the current economic trend, chip maker AMD promised to make profits in 2002 by increasing its laptop and server focus and lowering manufacturing costs.

Jerry Sanders, chief executive of the chip giant, outlined targets for 2002 at the company's annual analyst meeting. "The year will largely be defined by our success in the server and mobile [notebook] space as we strive to hold ground in the desktop space," he said. AMD lost $187m in the third quarter of 2001.

Sanders was also bullish about AMD's plans to break the cosy relationship between Microsoft and Intel. "Instead of a duopoly we are going to have a holy trinity," he claimed, adding that Intel had made the mistakes. "Intel is trapped because when it designed the Pentium 4 it did not expect real competition."

But IDC analyst Andy Brown was not convinced. "On the mobile front AMD is nowhere. People want battery conservation and it is not able to offer this," he said. "I think it is very unlikely that Microsoft will drop Intel for AMD. Intel has been working very hard and it will not let anyone break into its space."

He said that Intel had learned a lesson when Transmeta threatened with its low consumption Crusoe chip. But he added: "AMD is definitely trying to move closer to Microsoft and the naming of the new Athlon XP shows this."

Richard Baker, marketing manager at AMD, said the company is already strong in the server market for industries that use applications such as computer aided design and digital content creation. "Anything that requires a lot of horse power per dollar," he explained.

The company is also planning to sell its chips through the increasingly resilient second-tier, or so-called white box, manufacturers.