San Francisco (CNN) -- When Intel's drive to shrink its processors while maintaining speed began to hit a brick wall, its silicon-chip wizards rethought conventional design wisdom.
The result of a decade of research is a processor called Ivy Bridge, which will be smaller, faster and -- perhaps most important in this mobile world -- more energy-efficient.
Intel demonstrated prototype desktops, laptops and servers running the new chip at a news conference Wednesday. It won't be ready for mass production until later this year or early next year, executives said.
The company declined to name potential hardware partners, but Intel is the largest provider of processors to PCs and laptops, including those from Apple, Dell and Hewlett-Packard.
Intel has virtually no presence in smartphones and tablets, which are among the fastest-growing electronics sectors. This new design is expected to propel the company into the mobile arena, executives said.
ARM Holdings, a British company chip developer, dominates much of the mobile market, thanks to its efficient processors that require little battery power. Nvidia, another chip maker, has also ramped up development of mobile processors.
Unlike Intel, ARM doesn't manufacture its own chips to sell in volume. Apple, Nintendo, Nokia, Samsung, Sony Ericsson and others license ARM's chip designs for their products. Many gadget makers that pay to use ARM's designs also buy Intel chips for their computers and servers.
Despite promises, Intel has failed to deliver a low-power chip suited to miniature gadgets like phones and tablet computers, with their relatively tiny batteries. Partner electronics makers and investors are getting restless.
The development Intel showed Wednesday was a decade in the making, said Mark Bohr, an Intel senior fellow.
It employs a three-dimensional structure to pack more processing channels into each transistor, the microscopic unit that amplifies electronic signals and is a building block of all electronic devices.
Traditionally, transistor channels have been situated flat on a surface. Intel engineers took these channels, which serve as the neurons for a computer's brain, and realigned them to fit into smaller spaces.
Intel called the design "a fundamental departure" from the two-dimensional transistor structure that has powered electronics within computers, cars, household appliances and other devices for decades.
Intel said the 3-D transistors are so small that more than 100 million could fit on the head of a pin. The original transistor, built by Bell Labs in 1947, was large enough to be pieced together by hand.
"Transistors have entered the third dimension," Bohr said onstage.
He said the new design will help the company push the limits of Moore's Law, Intel co-founder Gordon Moore's theory that the number of transistors able to fit on a microchip doubles every two years or so.
The chip architecture used in Ivy Bridge, a version designed for full-powered computers and servers, will make its way into other areas, such as Intel's mobile-focused Atom processor, said Dadi Perlmutter, a vice president for Intel's architecture group.
"This is one of the fundamental things that we believe is going to keep us extremely competitive," Perlmutter said, "and definitely going to help us to move ahead of the ARM system because we have this advantage in processing technology."
An Atom processor using the new 3-D transistor layout could come as early as mid- to late 2012, said David Kanter, a technology analyst.
"The smartphone market is just sort of emerging," Kanter said. In processor research and development, "Intel has a one-year lead over everyone, and now it's widening."
The increase in performance with Ivy Bridge compared with previous generational improvements in processors is "really, really big in context," Kanter said.
Ivy Bridge is 37% more efficient than current top-of-the-line Intel chips at low voltage, making this Intel's "most significant technology announcement of the year," a spokesman said.
Bohr, the Intel fellow, acknowledged as much, saying: "We've never achieved that sort of performance gain on low-voltage on any previous technology."
Being able to use the 3-D method to mass produce chips could give Intel a three-year lead over competitors, Bohr said. The concept was first demonstrated by Intel in 2002.
"This general structure is well known in the industry," Bohr said. "The real challenge is to make this manufacturable."