AMD plans to ship its first 32 nm CPUs in 2011. Those products will include both discrete processors and versions with CPU and graphics cores on a single 32nm die, said a company spokesman.

AMD acquired ATI Technologies in October 2006, in part, to merge ATI's graphics cores with its CPUs in so-called accelerated processors. "Now Intel could have a year with integrated graphics before AMD gets there," said Nathan Brookwood, principal of market watcher Insight64 (Saratoga, Calif.).

Intel did not reveal any performance information for the new 45 nm version of the graphics core used in its existing 65 nm Series 4 chip sets. It's also unclear how much of a performance boost graphics will have when integrated on a single chip as AMD plans as opposed to on a package as Intel has done.

"I don't think [the performance] will differ much at all because graphics and the memory controller are still on same die" in the Intel chips, said Steve Smith, director of group operations for Intel's Digital Enterprise Group. Smith demoed the 32 nm CPUs in San Francisco.

At 65 nm, AMD's integrated graphics chips outperform those of Intel, said Brookwood. "But I don't know if Intel's moving their core to 45 nm will make a huge difference," he added.

Mark Bohr, an Intel senior fellow, said the new 32 nm processor provides an estimated 22 percent performance boost and 70 percent smaller features. The process offers in metal layers and uses immersion lithography only on the most critical layers to save cost.

In a separate talk, chief executive Paul Otellini said Intel will invest a total of $8 billion to get its 32 nm process up and running, it largest ever investment in a process node. It is available now in one Hillsboro, Oregon, fab and slated for use in four other Intel fabs.

The company is providing a derivative process for its system-on-chip designs such as Atom. "The processes use an identical equipment set, but the SoC version is optimized for ultra low leakage, higher voltages and a wider range of I/Os," said Bohr.

The Westmere products, the first to debut in the 32 nm process, are essentially shrinks of Intel's current 45 nm Nehalem parts. However, Intel has added seven new instructions to accelerate encryption, including six for the popular AES algorithm.

The first two Intel 32 nm CPUs are Clarkdale and Arrandale, mainstream desktop and notebook CPUs respectively with two dual-threaded cores. Both have a separate 45 nm graphics core with a memory controller on the package and will ship before the end of the year although systems using them may not debut until 2010.

Intel also plans to roll out by the end of this year two 45 nm processors positioned as high end desktop and notebook chips without integrated graphics. The will sport four dual-threaded cores.

The new 45 and 32 nm processor can plug into common motherboards using a new I/O chip, part of what Intel calls its Series 5 platform. "I'm really impressed with these Series 5 platforms because you can have a single motherboard and can populate it with quad core CPU and discrete graphics or a dual core CPU with integrated graphics or both," said Brookwood.

In 2010, Intel will ship Gulftown a 32 nm high-end desktop processor with six dual-threaded cores and no integrated graphics. It also plans a slate of 32 nm server chips supporting systems with one, two or more CPU sockets.