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High performance computing has long been a part of Intel’s dossier. But a deal announced on Monday with supercomputer maker Cray Inc. could paint Xeon in neon on Intel’s resume.

The multi-year pact puts Intel’s dual-core Xeon processors—found in most of the world’s most powerful HPCs—in Cray’s next-generation system, called Cascade. Scheduled for availability sometime after 2010, Cascade was originally set to use Opteron chips, and still might.

Intel also will help Cray develop technologies based on Intel’s QuickPath Interconnect, the high-speed, low-latency bus that replaces the front-side memory bus with two 25.6 Gbps channels per processor for accessing memory and joining processors or other motherboard components. QuickPath will be introduced later this year with Intel’s Nehalem processor, which initially will ship with four cores and later be available with in two- and eight-core models.

The deal also might help Intel get a leg up on arch rival AMD, whose processors have until now occupied most of Cray’s x86 purchase orders. Although AMD’s quad-core chips have been lauded for their fast memory access, the company has had trouble getting them out the door.

The loss of Cray’s business will surely add to the woes of the troubled AMD. The company on April 7 announced lay offs of 1680 employees, about 10 percent of its workforce. AMD also announced that sales for the most recent quarter we off by 15 percent, citing price wars with Intel and market uncertainty. The alliance with Intel might just be a sign of Cray hedging its bets.

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