With growth in the overall PC market chugging along in the high single digits, Intel and AMD are keen to find new uses for their chips and reckon the growing amount of digital photos, music and video in homes will provide fertile ground.

AMD said it would work with consumer electronics companies and PC makers to offer a souped-up home theater system powered by its Athlon 64 chips. The device would enable surround sound, video recording, Internet and computing functions.

"This is one set top box-looking device that can act as a set top box, a DVR (digital video recorder), home theater or stereo, and can also play your PC content," said Aaron Feen, director of AMD's consumer marketing.

AMD also plans to offer a home media server that could store and stream music and video throughout a home.

"Over time, it gets consumers doing more sophisticated things, which ultimately demand more processing power ... and benefits us in turn," Feen told Reuters in an interview.

Last year, AMD continued to grab market share from Intel, which responded by refreshing its entire product line and slashing prices on older chips.