The world’s largest chip manufacturer was schedule to show off an Intel-based version of the OLPC XO, previously known as the $100 laptop, at CES 2008 this week. However, Intel suddenly left the non-profit project because there was a growing discord between the company and the OLPC concerning Intel’s competing laptop, the low-cost Classmate PC. Intel and the OLPC had been involved in discussions for years about participating in the project, which aims to deliver cheap computers to children in developing nation where technology is scarce. Intel finally joined the OLPC last summer, but the partnership was short-lived.

A war of words has ensued over the last few days concerning Intel’s decision. The OLPC has claimed that Intel never delivered on any of commitments it made to the project, while Intel has accused the non-profit organization of demanding that the company drop its Classmate PC model.

But the flap but mean a gain for Intel’s biggest rival AMD, which showed off the OLPC XO at CES Unveiled on Saturday. The product placement at the conference’s opening press event was a not-so-subtle jab at Intel. AMD has been involved with the project for several years, and now the chip maker will be the exclusive processor provider for the OLPC. Along with funding and research & development support for the project, AMD supplies its Geode LX processor for the laptop.

The OLPC XO is manufactured by Quanta Computer and is built in a rugged, subnotebook style with a 7.5 inch display. The laptop features a Linux operating system courtesy of the Fedora Project, a wireless LAN, a 1 GB flash drive, built-in video camera and a stylus areas and touch pad. The product, however, does not have several traditional features such as a hard drive, CD/DVD drive, PC card slot, or fans. The laptop was designed to use very little power - 2 W - and was originally envisioned to have a hand-crank power generator, though those plans have been put on hold.

The OLPC was started by members of the MIT Media Lab and initially announced in early 2005. The goal was to get the OLPC XO down to a $100 price tag but currently the cost of the machine is closed to $150 to $200. In addition to AMD, the OLPC has partnerships with Red Hat, Google, eBay and other companies.