Intel ( INTC) unveiled important details of its forthcoming microprocessors, including a breakthrough in new transistor materials, as it pushes forward with an aggressive manufacturing plan.

The Santa Clara, Calif., company said Friday that it is on track to introduce processors for servers, desktops and notebook PCs in the second half of the year, with circuits that measure 45-nanometers.

The new family of chips, dubbed Penryn, is part of the existing generation of processors based on the Core microarchitecture that Intel introduced last summer. But the smaller circuitry will provide improved performance and energy efficiency characteristics, compared with the currently available Core Duo chips featuring larger, 65-nanometer circuitry.

With competition between Intel and Advanced Micro Devices ( AMD) fiercer than ever, the factory is playing a critical role in shaping the contest. By manufacturing chips with smaller circuits, a company can cram more transistors per chip, reducing its costs or increasing the performance of its products. For Intel and AMD, keeping their manufacturing operations on schedule is critical.

Intel enjoys a lead over AMD, having converted the majority of its production to 65-nanometer chips in June and vowing to begin its first shipments of 45-nanometer chips in the second half of this year. AMD began volume production of 65-nanometer chips in December and plans to move to 45-nanometer transistor production next year.

According to Intel, Penryn chips will feature 490 million transistors -- twice the density of today's Core Duo processors. The new processors will devote some of the extra transistors to an expanded on-chip cache, as well as added computing instruction sets geared for multimedia applications.

And Intel says the new chips will feature higher clock speeds, which improve performance, while maintaining the power consumption levels of its currently available processors.

Much of the new traits will be possible thanks to what Intel described as a radical shift in transistor material. Instead of using the polysilicon that transistor gates have relied on since the 1960s, Intel said the transistor gates on Penryn chips will be made out of undisclosed types of metals, while the transistor's thin oxide layer will for the first time feature a so-called high-K material.

Mark Bohr, Intel's senior fellow for Logic Technology Development, called the company's production of chips featuring the new materials a major breakthrough that will enable the company to move ahead with Moore's Law, the dictum that states a chip's number of transistors can double every 18 months due to the continuing ability to shrink transistor size.

One of the challenges facing the chip industry is that as a chip's transistors shrink to smaller sizes, they tend to leak more electrical current, resulting in poor energy efficiency. By employing new materials, Intel said it can reduce transistor gate leakage by 10 times.

"These are not just lab devices," Bohr said. "We actually made these in 45-nanometer."

"No other company has reached this level of success and they're not expected to have high-K plus metal gate materials until the 32-nanometer generation or later," he noted.

Last month, AMD and IBM ( IBM) announced that they had achieved successful early results with 45-nanometer chips through an alternative approach using immersion lithography and a material known as ultra-low-K interconnect material.

Intel has been researching and experimenting with new transistor materials for years, but until Friday had not publicly committed to using the new material in its 45-nanometer generation of chips.

"From a technology perspective, we've all been waiting for people to announce next generation materials," said Len Jelinek, an semiconductor manufacturing analyst at industry research firm iSuppli. "As we move to 45-nanomer, 32-nanometer and beyond that, the industry has got to find new materials to solve some of the problems of scaling that only get it so far."

Intel said the new material will require a few extra steps and changes to its manufacturing process, but said that it will be able to use most of its current equipment. Intel plans to begin manufacturing the processors in three chip fabrication facilities, or fabs, by the first half of 2008.