The smallest components in computer chips to date are 14 nm in size, although the industry has already begun the transition to producing 10-nm chips. Each new generation of chips is defined by the smaller size of its basic components.

IBM has manufactured the first prototypes of the chips in a laboratory and is currently exploring ways to produce them in its factories. The firm said the new advances will enable it to produce chips containing 20 billion transistors, or switches, compared to the 1.9 billion on the Intel's most advanced 14-nm chips.

The firm is making a big push to reduce the size of transistors and other microscopic components on its fingernail-sized chips, following a trend of increasing computer power -- known as Moore's Law.

The law -- or, better said, observation -- bears the name of Gordon Moore, one of the pioneers in developing silicon chips and the co-founder of Intel, and holds that, over the history of computing hardware, the number of transistors in a densely integrated circuit has doubled approximately every two years.

The announcement made on Thursday by IBM means that the past exponential increase in computational power will continue apace for the next few years. IBM said it was able to resolve development problems for the new chip by using silicon germanium -- rather than just silicon -- in key parts of the chip, something which makes it possible for even smaller elements in the chip to operate properly.