Measured in another way, the chipset can transmit the equivalent of four million simultaneous telephone conversations. The company said that the optical transceiver can move data at up to eight times more quickly than the fastest existing optical chips -- up to 160 Gbps.

The optical transceiver chipset moves information as light signals, not as electrical signals, and IBM said it could be available by 2010.

New Chip Is 'Groundbreaking'

IBM said that the new optical chipset, only one-fifteenth the size of a dime, can be manufactured with high-volume techniques and so could result in low-cost products. They could be integrated into printed circuit boards for PCs or set-top boxes.

Samir Bhavnani, an analyst with Current Analysis, said that the new chipset could be "groundbreaking."

"2010 is not that far away" for a delivered product, he noted. For businesses, he said, there could be many applications involving huge video or data files, but the network itself -- the public Internet or an internal LAN -- might then become the chief bottleneck.

Yankee Group analyst Laura DiDio cautioned that IBM has done a lot of research and development that, ultimately, "never sees the light of day." But if the chip did emerge, she said, it could have major implications for computer platforms and for conducting business.

"Any technology that uses this chipset," she noted, "will need to upgrade the other components to take advantage of the high levels of speed." She said that, for data-intensive businesses such as engineering firms, law firms, or hospitals, the impact could be major.

Breaking Communications Records

As the appetite for huge bandwidth is being fueled by the distribution of movies, video clips, and music over the Internet, several research labs are developing optical solutions. Researchers from the University of California at Berkeley and Intel , as one example, have reported development of very high speed but low cost "laser chips." In other research, IBM has previously announced methods for using light to store data, in addition to transmitting it.

Measuring 3.25 by 5.25 millimeters, IBM's new optical chipset contains both driver and receiver circuits, and was built using industry-standard complementary metal oxide semiconductor (CMOS) technology. Optical-grade plastic fibers are used to transmit data, and optical components use indium phosphide (InP) and gallium arsenide (GaAs).

Because of the large number of communication channels as well as the very high speeds for each channel, IBM said the chipset provides the highest record ever of transmitted information per unit of physical space.

The formal paper detailing the chip will be presented Thursday at the 2007 Optical Fiber Conference in Anaheim, California. The project is partially funded by the Defense Advanced Research Project Agency's Chip to Chip Optical Interconnect program.