Intel makes chip breakthrough

Intel has become the first manufacturer to produce a working chip for the next generation of miniaturisation, where transistors are reduced to 45 billionths of a metre in size.

The 45-nanometre breakthrough comes as Intel is ramping up production of the latest 65 nanometre chips, six to nine months ahead of its biggest rival in processors, AMD. And this is an important step in Intel's attempts to take back recent market share losses.

The move to smaller-scale 65 and then 45 nanometre chips means Intel can cut costs and undercut rival’s prices. The new scale allows more transistors on a chip, greater power efficiency and faster performance.

Intel has crammed more than 1bn transistors on its 45nm test chip and volume production is expected from summer 2007.

Intel seem to be hitting their stride again. And they need to to afford the huge new bets they are making in R&D and marketing (including new brands and straplines). Plus, they have to regain customer confidence after shortages last Xmas.