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Intel, the world’s biggest semiconductor maker, on Wednesday said it had 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, Advanced Micro Devices.

The lead in manufacturing technology suggests Intel could begin to recapture market share lost to AMD, whose processors have been offering better performance and energy efficiency.

Figures just released from Mercury Research show AMD’s overall market share of the dominant “x86” processor market grew to 21.4 per cent in the fourth quarter, up from its 17.7 per cent share in the third quarter. Intel and AMD have more than 98 per cent of the x86 market.

AMD advanced across all segments – its server market share grew from 12.7 per cent to 16.4 per cent, desktops increased from 20.4 per cent to 24.3 per cent and mobile processors grew from 12.2 per cent to 15.1 per cent, according to Mercury.

Intel last week blamed a shortage of chipsets for loss of market share and fourth-quarter results that fell short of expectations.

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

Intel said it had crammed more than 1bn transistors on its 45nm test chip, which had been produced on time as it continued its chip evolution of a new generation every two years. Volume production is expected from the second half of 2007.

Copyright The Financial Times Limited 2019. All rights reserved.

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