SAN FRANCISCO (Reuters) - Intel Corp will start production this week at a new $3 billion factory in Arizona that is its first to mass-produce microchips with circuits almost a third smaller than before, the company said on Wednesday.

The new facility, called Fab 32, will start production on Thursday of a chip design known as Penryn that has circuits just 45 nanometers wide, compared to the 65 nanometers that is used now. A nanometer is a billionth of a meter.

Smaller circuits usually translate into higher computing speeds and lower energy consumption. Chipmakers also see improved productivity because they can squeeze more circuits onto a given area of silicon.

Penryn chips will be used in desktops, laptops and server computers that run networks. The processors are scheduled to hit the market on November 12, Intel said.

The design uses a transistor that Intel unveiled last year, an advance that was hailed as the biggest breakthrough in four decades to the basic building block of microchips.

The factory, located in Chandler, Arizona, where Intel has several other facilities, helps the world's biggest chip maker maintain its manufacturing edge over rival Advanced Micro Devices Inc , which now makes processors on 65 nanometer technology and expects to move to 45 nanometers next year.
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