Advanced Micro Devices appears ready to offer the stiffest challenge to Intel's Netbook processor yet. AMD's trump card: extra circuitry integrated into the main processor that brings a higher level of graphics horsepower to small, thin laptops.

New AMD chips should appear in slim designs like the MSI X-340 early next year.

Today, at the company's finanical analyst day, AMD announced an umbrella technology dubbed "Brazos" that comprises two new lines of processors for Netbooks and small laptops.

Aimed at designs that typically range from 10-inch to 13-inch diagonal screen sizes, the "Ontario" and "Zacate" line of chips graft AMD Radeon 6000 series graphics technology onto the main processor, or CPU. And that's exactly what may give AMD the edge in performance over Intel's Atom.

"I would have to give the graphics edge to AMD particularly in Ontario," said Ben Bajarin, an analyst at Creative Strategies. "[Though] Atom will still have the edge in lower power and performance per watt and probably get into smaller form factors."

A write-up at Notebook Review was upbeat about price-performance: "If streaming online videos and playing games are important to you then you'll have a hard time finding Intel-based notebooks and netbooks with the same level of performance for less than $500."

AMD is also touting the fact that it graphics silicon supports Microsoft's DirectX 11 technology for boosting gaming and multimedia performance. Intel's integrated graphics currently does not support DirectX 11.

New laptops using the chips are expected early next year.

The Ontario and Zacate processor lines are almost identical but run at different speeds. They will come in single and dual-core versions and have power envelopes of 9 watts and 18 watts, respectively. Here's a brief overview: