Intel launches New Chips with Smaller Circuits

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By Scott Hillis

SAN FRANCISCO (Reuters) – Intel Corp (INTC.O: Quote, Profile, Research), the world’s biggest microchip maker, unveiled fast new processors on Sunday made with new techniques that can etch circuitry nearly 200 times smaller than a red blood cell.

The chips are the first in the world to be mass-produced with a 45-nanometer process, about one-third smaller than current 65-nanometer technology. A nanometer is one-billionth of a meter.

“Across all segments we’re increasing performance and increasing energy efficiency,” said Tom Kilroy, general manager of Intel’s enterprise group.

Known by the project name Penryn, the chips hold little in the way of fundamental design advances but are an important step in continuing the industry’s track record of delivering chips that get smaller and faster every two years or so.

They use a new kind of transistor — the basic building block of microchips — that Intel unveiled earlier this year in what was hailed as one of the industry’s biggest advances in four decades.

Penryn is the “tick” in Intel’s “tick-tock” strategy of shrinking an existing chip design to a smaller size, then following up the next year with an all-new blueprint, known as a microarchitecture.

“They are taking a successful product and making it smaller, and in the process of making it smaller, it gets faster,” said Nathan Brookwood, principal analyst of consultant Insight 64.

Brookwood said he reckoned the new chips, to be sold under Intel’s Xeon and Core 2 brands, would be able to run most software up to 15 percent faster.

The 45 nanometer shift is also important to Intel because it means the company can make more chips from a single platter of silicon, boosting productivity and helping recoup investment on factories, which cost about $3 billion to build.

The company expects to make the majority of its processors on 45 nanometer by the middle of 2008, mirroring the progress of its 65 nanometer products, Kilroy said.

“We feel this tick-tock model is on track and our cadences allow us to ramp pretty fast,” Kilroy said.

It cements Intel’s manufacturing lead over rival Advanced Micro Devices Inc (AMD.N: Quote, Profile, Research), which only started making chips on 65 nanometers earlier this year but plans to try to roll out 45 nanometer technology in 2008.

Intel will initially sell a dozen versions of the chips for server computers that power corporate networks, with prices ranging from $177 to $1,279. A version for high-end consumers such as gaming enthusiasts will sell for $999.