Intel plans to convert to new chip production technology that it said would cut manufacturing costs by nearly one-third and result in higher output.
The company said last week that it expects in 2002 to begin producing chips using 300mm silicon wafers and 0.13 micron copper technology.
That was announced as Intel began producing its first 0.18 micron processors this week.
The chip giant will ship mobile processors using the 0.18 process this week.
Desktop processors based on the same technology, code-named Coppermine, are not expected until the autumn.
The jump to 0.18 micron manufacturing from the current 0.25 will allow processors to be smaller, faster and more powerful.
But an Intel spokesman predicted that the move to 0.13 micron copper technology in 2002 would result in a cut in production costs of about 30% per chip.
In most of the semiconductor industry, 200mm wafers are the manufacturing standard.
By increasing the size to 300mm, a manufacturer can make far more chips from a single wafer.
Also, by moving to 0.13 micron copper technology, processor sizes can be reduced - allowing yet more chips to be squeezed onto a single wafer, Intel told PC Week.
The 0.13 micron technology would also make it easier to produce more powerful chips that contain greater numbers of transistors, the company added.
The company said it plans to gain some of these economies of scale early.
This will be done by producing 0.13 micron chips on 200mm wafers in 2001 before moving to 300mm wafers a year later.
Current chips are made using aluminium, which is not a very good conductor but is easier to etch onto silicon than metals that conduct electricity more readily.
Copper had not been used previously because it presents several technical problems in the production process. However, in recent years these difficulties have been resolved.
Using copper instead of aluminium means that chips can now be made faster, more power efficient and smaller still, added Intel - which has been one of the slowest chip manufacturers to commit to copper.
IBM has said it expects all chips it produces to be based on copper technology by the end of this year.
PIII PLANS UNCONFIRMED
Intel refused to confirm last week that it plans to release in the fourth quarter of this year a version of the Pentium III based on the socket 370 packaging used for Celeron. This would allow PC manufacturers greater flexibility when designing systems, because a socket 370 chip would be considerably smaller than the slot cartridge now used for the PIII.
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