Researchers have successfully stored a single data bit in only 12 atoms.
Currently it takes about a million atoms to store a bit on a modern hard-disk, the researchers from IBM say.
They believe this is the world's smallest magnetic memory bit.
According to the researchers, the technique opens up the possibility of producing much denser forms of magnetic computer memory than today's hard disk drives and solid state memory chips.
"Roughly every two years hard drives become denser," research lead author Sebastian Loth told the BBC.
"The obvious question to ask is how long can we keep going. And the fundamental physical limit is the world of atoms.
"The approach that we used is to jump to the very end, check if we can store information in one atom, and if not one atom, how many do we need?" he said.
Below 12 atoms the researchers found that the bits randomly lost information, owing to quantum effects.
A bit can have a value of 0 or 1 and is the most basic form of information in computation.
"We kept building larger structures until we emerged out of the quantum mechanical into the classical data storage regime and we reached this limit at 12 atoms."
The groups of atoms, which were kept at very low temperatures, were arranged using a scanning tunnelling microscope. Researchers were subsequently able to form a byte made of eight of the 12-atom bits.
Central to the research has been the use of materials with different magnetic properties.
The magnetic fields of bits made from conventional ferromagnetic materials can affect neighbouring bits if they are packed too closely together.
"In conventional magnetic data storage the information is stored in ferromagnetic material," said Dr Loth, who is now based at theCenter for Free-Electron Laser Sciencein Germany.
"That adds up to a big magnetic field that can interfere with neighbours. That's a big problem for further miniaturisation."
Other scientists thought that was an interesting result.
"Current magnetic memory architectures are fundamentally limited in how small they can go," Dr Will Branford, of Imperial College London, told the BBC.
"This work shows that in principle data can be stored much more densely using antiferromagnetic bits."
But the move from the lab to the production may be some time away.
"Even though I as a scientist would totally dig having a scanning tunnelling microscope in every household, I agree it's a very experimental tool," Dr Loth said.
Dr Loth believes that by increasing the number of atoms to between 150 to 200 the bits can be made stable at room temperature. That opens up the possibility of more practical applications.
"This is now a technological challenge to find out about new manufacturing techniques," he said.