AMD looks to soon capitalize on its success as the new sales king of the GPU market, by launching in early 2011 its "Fusion" products, which puts a GPU and CPU together on a single die.

At the IFA 2010 trade show in Germany this week, AMD showed off an 18W TDP Fusion system-on-a-chip (SOC) solution.  The chip combines dual Bobcat cores with AMD graphics, in what AMD calls an Accelerated Processing Unit (APU).  

The product is codenamed "Zacate" and looks like it could make a splash on the notebook scene thanks to its ability to decode 1080p video and play modern video games (all on a lean power budget).  Such a processor would be particularly desirable to ultra-portable designs.

Unfortunately for AMD it isn't the only one cooking up an APU.  Bloomberg is reporting that Intel Chief Executive Officer Paul Otellini will show off his own company's take on a GPU+CPU SOC at the Intel Developer Forum in San Francisco next week.

The announcement creates in an interestingly competitive scenario -- AMD arguably has more GPU experience and the better graphics hardware technology.  But Intel has had superior CPU processing per dollar for some time now.  

John Taylor, a spokesman for the Sunnyvale, California-based AMD is quick to note his company's graphics edge, stating, "There are decades of research and design that goes into our discrete graphics.  Intel has yet to deliver a product that has discrete-level performance. Right now, it’s just claims."

Of course those are bold words coming from a company that has experienced plenty of delays of its own in the past.

Intel is reportedly confident that it can outcompete AMD in terms of price.  But its integrated graphics processors thus far have been far from stellar performers, to say the least.  So who will pull off the APU upset?  The CPU champion, or the GPU grandmaster?  The financial stakes are high and the market is wide open; customers can eagerly await a hard fought battle and the release of some exciting new options in 2011.