AMD has entered the 65nm world with the release of its new dual-core Athlon 64 X2 chip.

The top chip for desktop PCs is the first made with the smaller design and is part of the company's continuing to keep up with Intel as the industry migrates from 90nm to the faster and more efficient generation of 65nm processors.

The change means AMD will be able to increase manufacturing output while improving the chips' performance and power efficiency, said AMD market manager Jack Huynh. The new chip is in computers already and by early next year will come with PCs from Acer, Dell, HP and Packard Bell.

The move to 65-nm manufacturing is crucial for AMD as the company strives to keep up with a flurry of new processors from Intel. Intel had a rough year in 2006, losing ground to AMD in market share, but has rallied in recent months. The company launched its Core 2 Duo family of desktop chips in July and its quad-core Core 2 Extreme in November. Intel switched its chip manufacturing plants to a smaller architecture months ago, and already sells more 65nm chips than 90nm chips.

One nanometre is one-billionth of a metre, meaning that the wires on 65 nanometre design chips are far slimmer than human hairs. Minuscule as that is, chip vendors already have plans to shrink the parts even smaller. Intel has already announced plans to use chip features of 45nm by 2007, 32nm by 2009 and 22nm by 2011.

As chip features continue to shrink, engineers struggle harder to take each new step. But as long as customers demand smaller, more efficient computers, there's plenty of economic incentive for the process to continue. "There's bound to be an end at some point, but we can't see it yet," explained Rob Willoner, a technology analyst with Intel's technology and manufacturing group. "At one point, people said it was 1 micron, which is 1,000 nm, but the industry passed that without blinking about a decade ago. Now some people are saying it's 5 nm. I don't see it happening before 2020 or 2025, and by then we could have radically different technologies to compensate."

AMD chose to apply the new "Rev G" 65-nm design to its high-end, dual-core desktop chip first because the company's mid-range, single-core Athlon and Sempron chips are already fairly efficient, running at 62 watts using a 90nm design, said AMD's Huynh.

The Athlon 64 X2 operated at a high 110 watts when it was first launched in June 2005, but this migration will bring it down to just 65 watts, he said. AMD will continue to produce both 90nm and 65-nm Athlon 64 X2 chips until it phases the larger-design chips out completely by the second half of 2007.

Next, AMD plans to apply the 65-nm design to its single-core Athlon and Sempron chips, shrinking them by the end of 2007. And the company has already begun work on the next step, shrinking its chips to a 45nm design, although AMD did not give a specific date for that goal.

AMD is selling the 65nm Athlon 64 X2 chips for $301 for a 2.6GHz 5000-series chip, $271 for the 2.5GHz 4800 series, $214 for the 2.3GHz 4400 series, and $169 for the 2.1GHz 4000 series, in lots of 1,000.