Intel steps up chip race with AMD

NEW YORK (CNNMoney.com) -- Intel made the latest move in its battle with AMD to be the first to introduce next-generation microchips that will run faster and use less energy than existing models.

Intel (Charts), the world's largest chip maker, said it is investing $1 billion to $1.5 billion to retool its New Mexico plant to produce the next-generation chips. The Rio Rancho, N.M., location will be the company's fourth factory scheduled to adopt the process.

The new chips are to have circuitry that is only 45 nanometers wide, which means they use less energy and don't cost as much to produce because less silicon is involved.

Production on the new chips is slated to start in the second half of next year, Intel said, putting it ahead of AMD (Charts), which has slated 45 nanometer production for mid-2008, according to Reuters.

The New Mexico plant currently manufactures chips that are 90 nanometers wide.

Intel's CEO said the new manufacturing process was a significant breakthrough for the company.

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