Paul Otellini, Intel’s chief executive, on Tuesday predicted the world’s biggest chipmaker was at the beginning of a cycle that could lead to rapid market-share gains over rival Advanced Micro Devices.

Mr Otellini was speaking to reporters at the Intel Developer Forum where the company introduced a new PC format it dubbed the Ultra Mobile PC. Microsoft has code-named it the Origami Project ahead of its own unveiling of the device on Thursday at the Cebit technology show in Germany.

Intel issued a first-quarter revenue warning last week and admitted to further market-share loss to AMD as it suffered from chipset shortages and an inventory build-up by its customers. AMD says it increased its market share from 11.9 per cent to 15.3 per cent between the third and fourth quarters.

Justin Rattner, Intel’s chief technology officer, told the forum that the company was “under tremendous competitive pressure” but was responding with a new micro architecture for its chips that would boost performance. It was also a year ahead of its rivals in producing smaller 65-nanometre circuit widths on silicon.

Mr Otellini later told reporters that the company had fared best when design and technology breakthroughs came together. It had gained five to eight percentage points of market share within a year when the company moved from the 486 to the Pentium processor and from Pentium 3 to Pentium 4, he said.

“We are at one of those dual transitions – a new micro architecture and new silicon technology - and we have the capacity to retake share and that’s our statement of intent this year.”

The move from 90nm to 65nm circuits for processors at four factories will produce major cost savings for Intel. Mr Otellini said it would also free up 90nm facilities to produce the chipsets that accompany processors. “We just couldn’t build them fast enough in the last year,” he admitted.

Mr Rattner said the new architecture would produce an 80 per cent improvement in performance and a 35 per cent improvement in power demands for its server processor codenamed Woodcrest.

The new ultra mobile PC (UMPC) will feature next-generation Intel chips and Microsoft Vista software, offering an optional keyboard, wireless connectivity and a smaller format.

“It’s a non-existent market today but we think, if you look at the evolution of phones getting smarter and the capabilities of the notebooks as they get smaller, there’s a blurring between them and the Ultra Mobile PC is the first device we’ve seen that starts to address any opportunity in that space,” said Mr Otellini.

“How big a market is it going to be? - we’ll figure that out.”

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