IBM has stolen a lead on its chip rivals with a new microprocessor that has encryption hardwired into its core circuitry.

“Secure Blue” - as IBM is reported to have named the chip in a calculated leak - will enable highly secure and on-the-fly encryption to be included in a range of mobile devices such as mobile phones, music players, and PDAs, that have hitherto not had such a capability.

A Secure Blue microprocessor would be able to encrypt and decrypt data as it is read to and from internal data storage, without the user being aware that such a thing was happening. If lost, the data would be irrecoverable, though presumably the user would have to enter some form of passphrase to access the data themselves.

"More than half of enterprise data is not on the servers any more, it's all over the place, on your Blackberry or your phone or laptop or with your business partners," Charles Palmer of IBM Research was reported as telling the Financial Times.

"These devices are in harm's way, but if they are subject to abuse or attack they will not yield their secrets if they have SecureBlue."

According to IBM, adding encryption does not increase the complexity of the chip significantly, adding only a small number of circuits to its bulk. The company also claims that the function can be used with chips not made by IBM, but no details of how this could be achieved were made available.

The development brings nearer the day when such a feature will be included in even more powerful chips used in computers such as desktop PCs. It also beats companies such as Intel – which has its LaGrande chip encryption system – and AMD to what could turn out to be an important first.

IBM’s argument for putting the encryption circuitry on the microprocessor is that it puts the function in the most secure place possible. It is more likely that it improves performance and reduces cost – encryption is normally included in computers as a specialised, secondary chip, and that can be expensive.

Equally, Secure Blue could be used to more easily enforce digital rights management (DRM), something that will attract it a degree of criticism from privacy groups.