After years of talks and demonstrations, Advanced Micro Devices on Tuesday started shipping Fusion processors for netbooks, laptops and small desktops priced between $200 and $599.

The Fusion chips combine a CPU and graphics processor in a single piece of silicon, which helps graphics and programs run faster while making PCs more power efficient. Fusion will compete with processors from Intel, whose Atom chips go into similar PCs priced starting at around $250.

Companies including Hewlett-Packard and Lenovo will ship netbooks and desktops with Fusion chips later this month. More PCs based on Fusion are expected to be shown at the upcoming CES (Consumer Electronics Show), which will be held in Las Vegas between January 6 and 9.

AMD first said it would make Fusion chips after it acquired graphics chip maker ATI Technologies in 2006. The chip was due for release in 2009, but was delayed after architectural and production issues hurt development efforts.

Fusion chips offer better graphics performance than Intel's netbook chips, said John Taylor, director of client and software product marketing at AMD. Fusion's integrated graphics processors are capable of playing 1080p high-definition video, while Intel's Atom chips, which also integrate graphics processors, are capable of rendering up to 720p video.

Fusion will also bring supercomputer-like features to laptops by harnessing the computing power of CPU and graphics cores, Taylor said. The graphics processors will accelerate specific video and graphics tasks such as Flash and DVD video playback, freeing up CPUs for everyday tasks like antivirus and word processing. Fusion will also support DirectX 11, which makes graphics on Windows 7 PCs more realistic.

Until now, PC makers attached a separate chip in netbooks to render high-definition video, which drained battery life. But integrated graphics processors in Fusion chips are highly power-efficient, which helps preserve battery life, said Cara Baez, concept product marketing manager at Hewlett-Packard.

HP is launching the Pavilion DM1 laptop in January with Fusion. Priced starting at $449, the lightweight laptop has an 11.6-inch screen and can play 1080p video. HP has measured DM1's battery life at around 10.5 hours, and high-definition video would shave just a few hours off that, Baez said.

Lenovo has announced the ThinkPad X120e ultraportable laptop, which has an 11-inch display and runs on AMD's Fusion chips. The laptop is 65 percent faster on graphics and offers 30 percent longer battery life compared to its predecessor, the X100e, which is available with AMD's Neo netbook processors.

"[Fusion] gives users an enhanced experience because the CPU and GPU are on the same chip," said Luis Hernandez, executive director of the Thinkpad transactional business at Lenovo.

The ThinkPad X120e will start shipping in February for under $400.

The Fusion lineup includes the E-350 dual-core chip running at 1.6GHz, which draws 18 watts of power, and is targeted at PCs in the higher price bands. The C-50 is a dual-core chip running at 1GHz, draws 9 watts of power and is targeted at PCs in the lower price bands. The chips include CPUs based on the Bobcat architecture.

Intel is also improving graphics capabilities in its next-generation Core chips, which will be introduced at CES. The chips, which are based on Intel's latest Sandy Bridge microarchitecture, have integrated graphics processors capable of playing 1080p video.

But the initial Core processors being launched are aimed at mainstream laptops and desktops, and Intel isn't yet competing on graphics in the netbook segment, Taylor said.

"Intel is starting at the high end, high price, low-volume segments of the market," AMD's Taylor said. "[That is] the segment of the market where discrete graphics processors are prevalent today."

AMD plans to start shipping the next Fusion chip code-named Llano for mainstream laptops and desktops in the middle of this year. The company will also release in 2012 new Fusion chips with up to four cores for tablets and netbooks. The chips, code-named Wichita and Krishna, will be based on an updated version of the Bobcat CPU core.