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Intel's Northwood Pentium 4 microprocessors, scheduled to debut next Monday, represent new manufacturing techniques that will let the chip reach its full potential in speed and performance, according to analysts. They also meet, and break, the 2 GHz speed mark.

The new, smaller-sized chips will allow Intel to save on production costs and permit the Santa Clara, California-based chipmaker to brandish price as a weapon against rival Advanced Micro Devices, which is answering with its own improved manufacturing, performance and speed.

"I think that looking at any particular speed bump, it's not significant compared to its predecessor," IDC senior analyst Shane Rau told NewsFactor. "Adding 200 MHz in the context of the entire PC will not result in noticeable performance improvement."

"However, the chip is significant in that it's the sign of much better things to come," Rau said.

News source: NewsFactor - Intel To Debut Pentium 4 'Northwood' Chips

Reaching P4 Potential

Rau said the computer chip industry has been waiting for Intel to begin making the Pentium 4 chip with a .13-micron process -- which allows for smaller and cheaper chips than the previous .18-micron process. He said two Northwood Pentium 4 processors set for introduction next week -- 2 GHz and 2.2 GHz versions -- represent a big step forward for Intel and chips.

"They are the first chips in a new manufacturing process that will allow Intel to open [the Pentium 4] up to its speed potential," Rau said.

The analyst said the new process should bring some "jumps in performance for 2002," adding that Intel has hinted it could hit 3 GHz by year-end that and the company may even surpass that mark.

High Yield, Low Price

Analysts say that Intel is saving about half the cost of producing chips using the new .13-micron process.

Forrester principal analyst Carl Howe told NewsFactor that the chip giant will be able to increase its yield and therefore hit AMD with even lower prices.

"The number one thing that defines the success of a maker of microprocessors is yield," Howe said. "Any time you can boost your yields and make smaller chips, you have a price and marketing advantage."

Dropping Cost and Raising Speed

Rau agreed that Intel's new manufacturing process would allow the company to be as competitive as it needs to be in 2002.

"This is what .13-micron is all about," Rau said, adding that 300 mm wafers and Intel's 845 chipset will also help lower costs. "It gives them more leeway so they can lower the price as much as they need to in order to stimulate demand."

Rau said that beyond this year the newer manufacturing processes are also likely to be the basis for taking the Pentium 4 to clock speeds as high as 10 GHz in the future.

AMD's Answer

Although the price war started last year by Intel hit chief rival AMD hard, analysts say that the Sunnyvale, California competitor will be making even smaller Athlon XP chips with as much processing power as the latest Pentium 4 chips.

"I think AMD is going to be a viable competitor for quite a while," Howe said. "In general, most folks can match manufacturing."

"It's going to be an arms race," Howe added. "The good news is that there's a competitor now, which wasn't the case before."

Manufacturing For Mobile

While Intel has not made any announcements on a mobile Northwood, IDC's Rau said the smaller Pentium 4 will be ideal for notebooks because of its size and reduced heat generation.

"A mobile Northwood is inevitable," he said.

However, Rau referred to AMD's entry into mobile computing with the Athlon 4 and said that notebooks may present an opportunity for the number two chipmaker as well.

"Now, they're going to be able -- in .13-micron -- to put the Athlon dye into smaller notebooks, which is a growing mobile market," Rau said. "They should be able to take some market share there."