Intel has released the latest version of its powerful but pricey Pentium 4 Extreme Edition processor along with a new chipset that uses a faster front-side bus to connect the processor and the memory.

The introduction of the 3.46GHz Pentium 4 Extreme Edition and the Intel 925XE chipset results in the most powerful desktop PC engine Intel has to offer. It also sets the stage for similar processors that are expected over the coming year from the company.

The Pentium 4 Extreme Edition is basically the same as the Pentium 4 desktop processor, but it features 2MB of Level 3 cache compared to 1MB of Level 2 cache on the Pentium 4. Cache memory is used to store frequently accessed data close to the processor, where it can be accessed more quickly than data stored in the main memory, improving performance.

Intel has decided to stop relying on increases in clock speed to improve processor performance and instead to use increased amounts of cache and multi-core designs to create more powerful chips. The company recently cancelled plans to release a 4GHz version of its Pentium 4 processor in the first quarter of next year, saying it would increase the cache of Pentium 4 processors to 2MB to improve performance and then release dual-core processors, expected by the end of 2005.

System performance will also improve with the new 1066MHz front-side bus on the 925XE chipset. Previously, Intel's fastest front-side bus topped out at 800MHz, but the introduction of the faster bus means Intel has a faster link between the processor and the memory.

The Pentium 4 Extreme Edition is extremely expensive. The new 3.46GHz processor costs $999 in 1,000-unit quantities, compared to $417 for the most powerful Pentium 4 processor in Intel's lineup. For that reason, the chip is generally marketed to gamers and PC enthusiasts who are willing to pay extra for the highest available level of performance, and it is not available as widely as the Pentium 4.

Dell plans to release a new version of its Dimension XPS gaming desktop PC alongside the new processor and chipset. The system comes with a new chassis and the ability to add as many as three 400GB hard drives that can be used in a RAID configuration. A base configuration costs $2,749 with the 3.46GHz Pentium 4 Extreme Edition, 512MB of 533MHz DDR2 SDRAM and a 80GB hard drive.

HP and Gateway are evaluating the technology before making a decision on when or if they will release new products with the chip.