Intel said on Tuesday it would be able to mass-produce computer processors with features one-third smaller than the current cutting edge within two years.
The world's largest chipmaker is now moving its technology to 45 nanometers and has for the first time demonstrated working processors based on 32-nanometer technology, said Chief Executive Paul Otellini.
A nanometer is one-billionth of a meter and is used to measure the width of circuits on a chip. Intel, whose processors power about 80 percent of personal computers, now uses 65-nanometer circuitry.
Smaller sizes allow more circuits to be crammed on a chip, boosting performance of the devices and driving up profits at chipmakers by letting them make more semiconductors from a single platter of silicon.
"The innovations that we as an industry are making today are the basis for the future of the computing environment and probably for the basis of the digital world," Otellini said at the start of Intel's twice-annual developers' forum.
Otellini demonstrated a dinner-plate-sized silicon wafer containing memory chips made with the 32-nanometer technology, saying that Intel could make processors based on the techniques within two years.
That would keep the Santa Clara, California-based company far ahead of smaller rival Advanced Micro Devices, which has said it would move to the 45-nanometer chipmaking technology by the middle of 2008.
Otellini also said Intel would introduce its 45-nanometer-based processors, code-named Penryn, on Nov. 12. It had previously said it would launch the products by the end of 2007.
He also said that its next-generation design, code-named Nehalem, was complete. On stage at the company's annual technical conference, he demonstrated a computer that was using a Nehalem microprocessor.
Intel shares rose 1.1% to $25.13 on Nasdaq, while AMD was 1.3% to $13 on the New York Stock Exchange. Intel's stock is up 24% so far this year, compared with a fall of 36% for AMD.