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Scientists at IBM say they have figured out how to produce smaller and more powerful microchips than previously thought possible. It is hoped IBM's announcement at San Jose on Monday will mean the creation of miniscule microprocessors which will save the IT manufacturing sector billions of dollars.

The breakthrough revolves around the distance between the circuit-lines chip makers must 'draw' onto the surface of a computer processor. IBM scientists declared they can now draw lines on silicon much closer together than ever before.

This technology 'prints' circuits onto chips in a method similar in principle to the way t-shirt manufacturers stamp images onto material using the silk-screening method.

Optical lithography has been in use for some time and it was thought it would need to be abandoned in the coming years; however, this development means the process needn't be phased out just yet. The IBM announcement also gives the industry time to come up with new manufacturing processes for increasingly smaller chips.

The entire semiconductor industry exists under the threat of Intel co-founder Gordon Moore, who in 1965 predicted that the number of transistors on a chip would have to double every few years until it became physically impossible to fit them onto a processor.

"Our goal is to push optical lithography as far as we can so the industry does not have to move to any expensive alternatives until absolutely necessary," IBM manager of lithography materials Dr Robert D Allen said.

"This result is the strongest evidence to date that the industry may have at least seven years of breathing room before any radical changes in chip-making techniques would be needed," he said.

The semiconductor industry is continually attempting to make microchips more powerful by fitting extra transistors onto a piece of silicon. This research typically leads to smaller, faster and cheaper electronics. Chip companies have looked into alternatives to optical lithography - such as using x-rays - but the technology is far from perfect and cost is unknown.

Chips with circuit lines 65nm wide are gradually being made available and chipmakers believe they can shrink to 32sm by about 2010 using optical lithography, but they are finding it increasingly difficult to postpone Moore's Law.

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