The next milestone in the relentless pursuit of smaller, higher performance microchips has been unveiled.
New materials have had to be developed to shrink the chips
Chip-maker Intel has announced that it will start producing processors using transistors with features just 45 nanometres (billionth of a metre) wide.
Shrinking the technology that underpins the basic building blocks of chips will make them faster and more efficient.
Computer giant IBM has also signalled its intention to start production of microchips using the technology.
"Big Blue", which developed the technology with partners Toshiba, Sony and AMD, intends to incorporate the transistors into its chips in 2008.
Intel said it would start commercial fabrication of processors at three factories later this year.
The development means the industry axiom that underpins the development of all microchips, known as Moore's Law, remains intact.
The proposition, articulated by Intel co-founder Gordon Moore in 1965, states that the number of transistors on a chip could double every 24 months.
The new Intel processors, codenamed Penryn, will pack more than four hundred million transistors into a chip half the size of a postage stamp.
Like current processors, they will come in dual-core and quad-core versions, meaning they will have two or four separate processors on each chip. The company has not said how fast the new devices will run.
The production of 45nm technology has been the goal of chip manufacturers ever since they conquered the 65nm barrier. 45nm refers to the smallest feature of the transistor used to make up the chip.
A transistor is a basic electronic switch. Every chip needs a certain number of them, and the more there are and the faster they can switch, the more calculations chips can do.
For nearly half a century, chip manufacturers have managed to keep up with Moore's Law, shrinking transistor size and packing more and more of them on to chips.
However, past 65nm the silicon used to manufacture critical switch element, known as gate dielectrics, no longer performs as it does at larger scales.
As a result, currents passing through the transistors leak and reduce the effectiveness of the chip.
To prevent this, researchers have had to develop new materials to contain the current at such small scales based on the metal hafnium. The silicon substitutes are known as high-k materials.
High-K refers to their greater ability to store electrical charge compared with silicon.
The new materials' development and integration into working components was described by Gordon Moore as "the biggest change in transistor technology" since the late 1960s.
The first working chips to incorporate 45nm devices were demonstrated last year by Intel, but they have never been incorporated into commercial products.
Dr Tze-chiang Chen, vice president of science and technology at IBM Research, said: "Until now, the chip industry was facing a major roadblock in terms of how far we could push current technology.
"After more than 10 years of effort, we now have a way forward."
The exact recipes for the different high-k materials used by Intel and IBM have not been disclosed, but importantly both firms have said that they could be incorporated into current production technology with minimal effort.