Intel Corp. (INTC) said on Wednesday it had made the world's first microchip using tiny ew manufacturing methods that promise to let the world's top chipmaker make more powerful, efficient processors.

The fingernail-sized memory chip is etched with 1 billion transistors that are only 45 nanometers wide — about 1,000 times smaller than a red blood cell, said Mark Bohr, a leading Intel engineer.

"It will pack about two times as many transistors per unit area and use less power. It will help future products and platforms deliver improved performance," Bohr told Reuters in an interview.

Intel, which makes more than 80 percent of the processors that drive personal computers, was on track to start making computer processors with the technology in the second half of 2007, Bohr said.

The Santa Clara, California-based company last year began making chips using 65-nanometer technology that represents the current state of the art in the semiconductor industry.

Intel declined to say how much it has spent developing the 45-nanometer manufacturing process, but the company is pumping billions of dollars a year into research as it tries to keep rivals like Advanced Micro Devices Inc. (AMD) from eating away at its dominance.

"We have a considerable lead over our competitors in the 45-nanometer generation," Bohr said.

The new chip makes good on Moore's Law, an industry maxim set forth by Intel co-founder Gordon Moore that stipulates the number of transistors on a chip — and therefore its processing power — doubles roughly every 18 months to two years.

"Things have to be faster and lower power, so it's ever-yet more challenging, but we have come up with some new innovations to scale things and keep things on track," Bohr said, referring to Moore's Law.

Asked if the engineer's quest for ever-smaller chips would soon start bumping up against the limits of what is physically possible, Bohr said: "I think it will continue for some time. It won't ever really end, it will evolve, and scaling will go on in some fashion we're not used to."