In the race to the next advance in chip manufacturing technology, called 45 nanometers, it looks like Intel might have as much as a one-year jump over AMD. (Forty-five relates to the size of the features etched into the chip.) AMD likely won't ship 45-nm processors until late in 2008.

Intel is readying four of its factories to crank out 45-nm chips (GRAPHIC HERE), said Robert Baker, general manager of Intel's technology and manufacturing group, at the Spring Analyst event.

"Penryn and its first-generation products on 45-nm come in the second half of this year," said Otellini. "Nehalem, the next generation micro-architecture, will ship in 2008 on 45-nm. We keep the cadence going in '09, with 32-nm silicon deployment, essentially a shrink of Nehalem. And then in 2010, Sandy Bridge, which is a new micro-architecture."

	(click image for larger view) Four chip-manufacturing fabs are ramping up to produce 45-nm processors. view the image gallery

An inherent benefit of the tinier features on a 45-nm chip is lower power operation. As well, shrinking the die size allows Intel to add more features onto the chip, explained Baker. For example, with Penryn, Intel is using that extra space to increase the cache size and to add new instructions, which make the processor more adept at handling video and multimedia.

For Intel's chip designers, going with more features is not a no-brainer. As Baker explained, there's a tension between using the addition space to add more features or to reduce cost. (The latter would be done by not adding new features, and using the unused space put more chips on each wafer, thus upping the yield.)

Moreover, the move to 45-nm doesn't mark the fruition of years of unimpeded advances toward ever-smaller feature sizes. Rather, companies such as Intel and IBM have in recent years grappled with the limitations of silicon—both practical and fundamental physics—as on-chip element more towards sizes where some things are only a few elements big. The biggest problem has been what's called "leakage," where current doesn't stay where it's supposed to.

That's led to a search for new materials. Intel thinks it's achieved a big breakthrough with a new material called High-k metal, which replaces the polysilicon that's been used for the past 30 years. "It's a fundamental change in materials," said Baker.

Moving forward, Intel will use the extra space afforded by 45-nm to begin integrating graphics handling into the processor itself. Interestingly, that's something some chip designers inside Intel urged the company to do in the early 1990s. Reportedly, that tack was rejected at the time because Intel more business advantages in keeping non-CPU features on ancillary chipsets, which could be sold separately.

Forty-five nanometers will also be used to built processors with more than eight cores. One such design, code-named Larrabe, is already on the drawing board. According to Otellini, Larrabe will "address very, very high-performance graphics and high-performance computing needs."