Facing a market glut of microprocessors and weak corporate demand for PCs running Microsoft's new Windows Vista OS, Intel hopes to stay profitable by producing new chip designs faster than its competitors, Intel CEO Paul Otellini said Monday. "There's clearly more capacity to build microprocessors than there is demand in 2007, and probably in 2008," Otellini told financial analysts at the Morgan Stanley Technology Conference in San Francisco. To decrease the impact of a head-to-head processor pricing war with rival AMD, Intel must return to the quick development habits it used when producing its Pentium family of chips, Otellini said. Intel backed off that pace after producing the Pentium 4 and soon began to lose market share when AMD launched the Opteron chip in 2003.
"We're doing product refreshes every two years, which is the model we invented and then stopped doing after Pentium 4, shame on us," Otellini said. "We fell off it -- mea culpa, we screwed up -- and now we're back on that pace." The company has announced a pace of upgrading its processor architecture and shrinking its transistor geometry in alternating years. That puts Intel on schedule to upgrade its 65nm Core 2 Duo processor to a "Penryn" 45nm geometry chip in 2007. The following year, Intel will upgrade its Core microarchitecture to the new "Nehalem" model and in 2009 shrink those chips to an even smaller, 32nm scale.