SAN FRANCISCO (Reuters) - Intel Corp. is on track to introduce the world's most advanced chip production technology in its products next year, the largest semiconductor maker said.

In a bit of semiconductor showmanship, Intel manufactured a memory chip with more than a half-billion transistors using its new 65-nanometer manufacturing process, Mark Bohr, Intel's director of process architecture and integration, said Sunday.

The announcement bolsters the Santa Clara, Calif.-based company's reputation for manufacturing superiority at a time when it is still recovering from a string of embarrassing product delays and glitches.

More broadly, the advance shows that the chip industry's pace of progress hasn't slowed, despite how difficult it has been to shrink the features on integrated circuits below 100 nanometers, or billionths of a meter.

"This is evidence that Moore's Law continues," Mark Bohr, Intel's director of process architecture and integration, said, referring to the chip industry's mantra that the number of transistors on a chip will double roughly every two years.

Intel (INTC: Research, Estimates) said the process has been made with a special focus on limiting power consumption and heat dissipation, including the use of "sleep transistors" that cut off power to parts of chips that are not in use.

Intel has invested billions of dollars into its factories and says its plans for 65-nanometer technology would leave rival Advanced Micro Devices (AMD: Research, Estimates) a generation behind in manufacturing technology.

"Others are still struggling to develop their first generation" of 65-nanometer technology, Bohr said.

Still, the development can't mask what has been an unusually trying period for Intel, which has had to delay and even recall some highly anticipated computer chips.

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The problem reached such proportions that Chief Executive Craig Barrett, in a July memo sent to the company's 80,000 workers, told all staff to reflect on attitudes and behaviors to get the company out of its hole.

AMD, which has largely avoided such public relations troubles, has just introduced its first products that use 90-nanometer technology, bringing it on par, at least temporarily, with its much larger rival.

A recent head-to-head test between Intel and AMD's best microprocessors showed that AMD had an edge for mainstream computer applications.

And the Sunnyvale, Calif.-based chipmaker is aiming to narrow the gap with Intel by partnering with International Business Machines (IBM: Research, Estimates) to develop its own 65-nanometer manufacturing process, and constructing a new chip factory in Dresden, Germany.