Shrinking in Order to Grow

The battle between rival chipmakers Intel and AMD ramped up Tuesday as both companies offered clues about their next generation microprocessors.

Seeking to steal some of the thunder from Intel's twice-annual Developer Conference currently underway in San Fransisco, AMD said late Monday it would roll out its new triple-core Phenom chip in the first quarter of next year. The move follows last week's launch of the company's quad-core Opteron chip—previously known as Barcelona—that was six months late to market.

But AMD's announcement was swamped Tuesday as Intel unveiled its new Penryn chip—set to ship on Nov. 12—that features microscopic circuitry measured at 45 nanometers, or billionths of a meter. The new chip marks a major improvement over the 65 nanometer chips that are currently the industry's most advanced.

"Growth can only be achieved through the introduction of new products," Intel honcho Paul Otellini told the conference. Penryn had been expected to debut "by the end of 2007," so Intel's announcement appeared to signal that the company's production roll out is slightly ahead of schedule.

"We are well ahead of the industry," Otellini said, according to the Wall Street Journal's Don Clark.

Otellini added that Intel, the world's largest chip maker, will be able to make microprocessors with circuitry as small as 32 nanometers within two years. He demonstrated the company's next-generation design, code-named Nehalem, according to a Reuters report.

The New York Times's Laurie Flynn points out that Otellini's announcement comes almost one year after the company announced a corporate overhaul aimed at cutting costs that slashed its workforce by 10 percent and cut $5 billion in expenses.

Both AMD and Intel shares were trading up well over one percent Tuesday afternoon amid a broad market rally spurred by the Fed's half-percentage point rate cut.

by Sam Gustin