Intel has created a more powerful chip without increasing its size, wrong-footing warnings that the firm had hit its technical limits.
The new chip could mean good news for Intel chief Craig Barrett
The breakthrough came after Intel managed to shrink the size of its transistors by 30%, enabling more of them to fit on a single chip.
That increases the processing power of each standard-sized chip, paving the way for ever more powerful computers.
Products featuring the new chips should be on sale next year, Intel said.
The new device also allows Intel, the world's biggest maker of memory chips, to gain a march on its closest competitor Advanced Micro Devices (AMD).
This latest development has been hailed as further confirmation of Moore's Law, a guiding principle of the technology sector for the last 40 years.
Intel founder Gordon Moore predicted in the late 1960s that the number of transistors on a chip - and therefore its processing power - would double every two years.
"This is evidence that Moore's Law continues, " said Mark Bohr, Intel's director of process architecture and integration.
Intel and its rivals have thrived on their ability to pack more transistors onto a chip, or semiconductor, but sceptics have questioned whether they could maintain the pace of progress.
The new chip was made possible by a process which limits power consumption by parts of the chip which are not in use, reducing heat emissions, Intel said.
AMD has just partnered with IBM to build a new chip factory in Dresden, Germany.