FASTER chips are the fuel of the computer industry. So the announcement on November 16th that Mubadala Development, an investment arm of oil-rich Abu Dhabi, would pay about $622m for 8.1% of Advanced Micro Devices (AMD), a leading maker of microprocessors, seems somehow fitting. The deal is an unexpected twist in the race between AMD and Intel, the world's largest chipmaker, in which Intel is again making the running.

For a while it seemed that AMD had pulled ahead of Intel in chip design. It devised a clever way to enable chips to handle data in both 32-bit and 64-bit chunks, which Intel reluctantly adopted in 2004. And in 2005 AMD launched a new processor that split the number-crunching between two “cores”, the brains of a chip, thus boosting performance and reducing energy-consumption. But Intel came back strongly with its own dual-core designs.

This month Intel began shipping its new family of “Penryn” processors, some of which have four cores. AMD offers similar chips under the “Barcelona” brand, and revealed its latest versions on November 19th. But Intel now has the technological edge. Next year it will launch new chips with eight cores on a single slice of silicon, at least a year ahead of AMD.

As the smaller of the two firms, AMD faces three handicaps. First, it has only two chip fabrication plants, or “fabs”, compared with Intel's 15, which still supply three-quarters of all processors for PCs (see chart). This makes AMD more vulnerable to manufacturing problems: its newest chips are not as fast as promised and have been hit by production delays. It also means that Intel can usually introduce new manufacturing processes faster. With Penryn, Intel has started using hafnium, an obscure metal, to insulate the transistors in its chips. This has made it possible to shrink the tiny switches even further without leaking too much current. AMD will not reach the same level of miniaturisation until mid-2008.

Second, Intel has more power over its customers, the PC-makers. AMD had hoped to catch up after convincing Dell, the world's second-largest PC-maker and a close ally of Intel's, to use its chips too. But the new relationship has been a disappointment so far. AMD claims that Intel is abusing its dominant position, and has complained to regulators in Asia, Europe and America. It alleges that PC-makers receive substantial rebates in return for buying most of their chips from Intel. America's Federal Trade Commission decided in October against opening a formal antitrust investigation, but in July the European Commission issued a “statement of objections” critical of Intel's business practices. In South Korea regulators are already considering penalties.

Third, there is money. Intel was able to recover quickly from its missteps because it has deep pockets. After slashing nearly 11,000 jobs in the past 12 months, its profit in the third quarter soared by 43%, to $1.86 billion. AMD, by contrast, has posted losses for four quarters in a row (although its latest loss of $396m was not as bad as expected) following its acquisition of ATI, a maker of specialised graphics chips, for $5.4 billion in 2006. Although the takeover made strategic sense, since AMD is now able to build high-end graphics features into its chips, it forced the firm to borrow heavily, just as it was fighting a bruising price war with Intel.

Hence the need for a cash infusion. The petrodollars from Abu Dhabi, if followed by the sale of some assets, could give AMD a fighting chance to survive this round with Intel and perhaps recover some of its former strength. This would be good news for customers, who benefit from the warring duopoly through lower prices and more innovation. Mubadala Development will not get a seat on AMD's board. But the deal will prompt worries that if technology spending slows, as many industry-watchers expect it to, America's high-tech industry will suffer, and more resource-rich countries will take the chance to buy their way into it.