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The deal with Chinese OEMs Dawning and Lenovo - the new owners of IBM's PC division - means AMD will supply Sempron chips to Lenovo Qitian M 6200M PCs and Opterons for the Dawning Tiankuo A Series i200-A servers.

The eastern province of Hebei's Education Bureau is providing the demo site for the nationwide 'Long-Distance Education Project'. Under the scheme, every computerised classroom will contain one server and 30 desktop PCs, benefiting 200,000 students.

'This is a breakthrough for AMD China that highlights overall momentum for AMD as well as our technically

'This win is a testament to our commitment to develop the China market, and highlights our vision of succeeding with local partners,' she added.

It is not the first time that AMD has worked with Dawning to close a deal in China. Back in 2003, the companies jointly announced the deal to build an Opteron-based Chinese supercomputer. Made from more than 2,000 Opteron 800-series processors, the machine was designed to have a memory capacity of up to 2.256 terabytes (2,256GB) and run at 10 Tflops.

More recently, AMD announced its sub-$250 reference PC. Dubbed the Personal Internet Communicator or PIC, the low-cost design is targeted at emerging markets such as China, India, Brazil and Russia.

It's not all good news for AMD, however. The company has updated its expectations for the fourth financial quarter - which ended 26 December - and says that while operating income is anticipated to be positive, it will be down significantly from the third quarter total of $68.4 million.