LOS ANGELES (AP) - DreamWorks Animation SKG Inc., maker of the "Shrek" movies and "Kung Fu Panda," announced Tuesday it will switch from Advanced Micro Devices Inc. computer chips to Intel Corp.'s as it moves toward making all 3-D movies.

The studio's relationship with AMD started in 2005, back when animating animal fur was a key industry milestone.

With that achieved in the very furry "Kung Fu Panda," released last month, the animation house is following through on a commitment made last year to make all its movies in 3-D starting with "Monsters vs. Aliens," which is scheduled for release in March 2009.

The 3-D format requires twice the computing power of traditional animation because viewers' right and left eyes receive separate images, meaning it can take up to 16 hours to process a single frame, the company said.

"Our artists, to a large degree, actually work blind," DreamWorks Animation Chief Executive Jeffrey Katzenberg told The Associated Press on Tuesday. "They send it out and have to wait overnight to actually see what they've done."

"The impact of these new chipsets is that it will go from overnight to hours to minutes," he said. "Within a handful of years - or less, actually - we may achieve the Holy Grail of our business, which is to actually work in real time. So it's actually, literally in the moment of creation, you can see your work."

Some 1,000 workstations and 1,500 server units at DreamWorks Animation will make the switch to Intel chips over the next 18 months, and a team of Intel engineers will fine-tune DreamWorks' proprietary software for use on the new equipment.

The studio began looking at its needs as its AMD contract neared an end, said John Batter, DreamWorks Animation's co-president of production for feature animation. The final touches on "Kung Fu Panda" were made with computers running on both Intel and AMD processors, he said.

Intel's code-named Nehalem processor for high-end workstations will have up to eight processor cores, while its Larrabee server processor will have between 10 and 100, said Intel spokesman Nick Knupffer. Those are the two chips DreamWorks has agreed to buy.

In contrast, AMD's three-year agreement with DreamWorks involved Opteron processors with dual cores. Since last year, AMD began selling quad-core processors and plans to develop 12-core processors by 2010.

"We've been happy with AMD up to this point," Batter said. "But as we look out and look at the number of compute engines per chip, the Intel roadmap syncs more closely with our needs."

Intel plans to use DreamWorks Animation as a test site for its future visual computing products, Knupffer said. Nehalem will be launched commercially by the end of the year, while Larrabee will launch in 2009 or 2010, he said.

AMD said the decision was mutual to end the marketing and equipment partnership, from which it benefited from publicity surrounding every DreamWorks Animation film for the past three years, but that it would seek to work with the studio again.

It was the latest blow for the world's No. 2 chipmaker, which has racked up more than $4 billion in losses in a skid that stretches back to the last three months of 2006.

"It's a cyclical industry," said AMD spokesman Drew Prairie. "We'll look forward to be able to work them again."

DreamWorks Animation's shares rose 89 cents, or 3.1 percent, to close at $29.65 Tuesday, while Intel's rose 21 cents, or 1 percent, to $20.92. AMD shares rose 15 cents, or 2.8 percent, to close at $5.53.