A couple of weeks ago, I wrote about Intel's (NASDAQ:INTC) plans to eliminate 10,500 jobs by mid-2007. My conclusion at the time was that the cuts were a painful but necessary step, especially if Intel hoped to beat back Advanced Micro Devices' (NASDAQ:AMD) growing prowess.
Yesterday, company officials announced that they had created, in partnership with researchers at the University of California, Santa Barbara, a new silicon-based computer chip capable of processing laser beams.
This might not sound like much, but it's actually a big deal. This latest development will enable lightning-fast, high-speed data communication between computer chips, and suggests the No. 1 computer chip manufacturer may be on track to get its groove back.
Although lasers are already used to transmit vast amounts of information over long distances via fiber-optic cables, problems occur when that same information must then be sent between separate chips within a computer -- a sensation perhaps not unlike slowing down on an exit ramp after speeding down a highway.
Previously, the only way it was possible to rapidly transfer large amounts of data between chips was to get a laser light from a silicon photonic chip somehow. This was no easy task because it required either aligning a pre-fabricated laser directly onto the chip or, alternatively, placing an external high-powered laser somewhere outside the chip. Both approaches were expensive and impractical for high-volume production.
This latest development -- which was achieved by bonding a special material to a standard chip that had special channels etched on it to act as light-wave guides -- makes it possible for hundreds and maybe even thousands of tiny lasers to be switched on and off billions of times a second.
The first market for these chips will most likely be high-end computer servers. Presently, Google (NASDAQ:GOOG), Yahoo! (NASDAQ:YHOO), Microsoft (NASDAQ:MSFT), and IBM (NYSE:IBM) are all building massive data-storage farms.
So far, it has not been practical for wireless devices to readily and efficiently access this data. The new silicon photonic chips overcome this shortcoming and portend a new era of high-performance computing.
For example, the new chips could do everything from seamlessly transferring large data packs of information between mobile devices to processing powerful video graphics on a cell phone. Such applications would also fuel demand.
Although Intel officials were careful to stress that the chips were "far from being a commercial product" (it's unlikely they could reach the market before 2011), the news offers me yet another reason to believe Intel remains a sound long-term investment.
It also suggests that the company is once again focused like a laser on transforming cutting-edge innovation into real, commercial products -- and that's the most important news for long-term investors.
Interested in other reasons why I'm bullish on Intel? Check out these articles:
Yahoo! is a Motley Fool Stock Advisor selection. Intel and Microsoft are Motley Fool Inside Value picks. To see the other stocks Philip Durell and his team are tracking, try a 30-day free trial of the Inside Value service.
Fool contributor Jack Uldrich owns stock in Intel, Google, IBM, and Microsoft. The Fool has a laser-proof disclosure policy.
