Intel made two stunning disclosures yesterday — demonstrating a Pentium 4 processor running at 3.5GHz and then admitting that processor speed isn't everything when it comes to chip performance.

"Gigahertz are necessary but not sufficient," says Paul Otellini, executive vice president of Intel's Architecture Group, during an address at Intel's Developer Forum in California.

But this isn't the volte-face that it seems from Intel, a company that has built its fortune on convincing PC buyers that more speed is better. It's both more and less — a recognition that, at some point, processors will have to do more than just run faster.

Of course, chips will also have to get faster. Intel wants to emphasise its plans for improving processors beyond speed jumps because, in large part, the frequency issue is handled for the near future. The 3.5GHz P4 chip demonstrated at the developer's forum uses the company's new 0.13 micron production process, which produces a smaller, more efficient chip than the current 0.18 micron process, Otellini says.

Another move away from raw power comes in the form of Intel's upcoming mobile processor, code-named Banias. Due in the first half of 2003, the mobile chip will feature an entirely new core that is designed to use less power while maintaining performance.

By using new low-power circuits in Banias and shutting down parts of the chip when not in use, Intel hopes to create a processor that lets thin and light notebooks run for hours on battery power. This should mean PCs with small form factors as well as smaller more rackable servers, Otellini says.

On Monday, Intel launched its 2GHz P4. Systems using the new chip are already available, but there's no word yet on when a 3.5GHz P4 will be ready for the marketplace.

In coming years the P4 architecture will scale to 10GHz, Otellini said. After all, some applications out there, such as voice recognition and video encoding, already need more MIPS, or million instructions per second, than today's fastest processors can provide.