Intel has produced the world's first 45nm processors, and is on schedule to start shipping the units by the second half of this year.

The company showed off working models of the 'Penryn' chip at a presentation at its corporate headquarters in Silicon Valley.

Intel demonstrated a low-power dual-core processor for notebook computers, as well as dual-core and quad-core versions of desktop and server processors. It is also working on 10 additional 45nm models.

The chipmaker touted Penryn as the greatest semiconductor breakthrough in 40 years because it allows the company to continue to use current-generation silicon dioxide technology.

Intel claims that the chip will put the firm a year ahead of the competition.

It was previously believed that silicon dioxide could not be used beyond 65nm because chip components were getting too small.

The layer of silicon dioxide covering the gate in a transistor in a 65nm chip, for instance, is about five atoms thick, or about 1.2nm, and cannot be minimised any further.

"When they first described this to me a couple of years ago, I said that this cannot possibly work," Intel chief executive Paul Otellini said at the event.

"But we are doing it with this level of technology, we do not need Silicon on Insulator, we do not need emerging lithography. It is just high performance, high volume, low cost innovation."

Silicon on Insulator is often touted as a technique that allows chip manufacturers to curb power leakage in next-generation semiconductors.

AMD and IBM use the technique in some of their processors, but Intel maintains that the technology's power benefits do not measure up to the added costs.

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