Filed at 7:42 p.m. ET

SAN FRANCISCO (Reuters) - Intel Corp. (INTC.O) will this week start selling its fastest-yet Pentium 4 that also tricks software into thinking that there are two chips in a PC -- speeding up programs and boosting overall computer performance, the company and analysts said on Monday.

Intel will announce ``later this week the industry's first 3- gigahertz processor'' with ``two virtual chips inside one,'' Paul Otellini, Intel's president and chief operating officer said at an Oracle Corp. customer conference here.

Intel declined to comment on the exact timing of the announcement.

The new 3-gigahertz Pentium 4 will feature what Intel calls Hyper-Threading technology, which makes one processor appear as if it were two processors to operating-system software and applications, analysts said, boosting performance as much as 25 percent on certain software programs.

Intel first offered Hyper-Threading in its Xeon processors for servers and workstations in February and is now adding it to desktop processors for the first time. Dual-processor systems, which have two separate chips that function as the ``brains'' of a PC or server, are considered cost-prohibitive to most PC users.

``With some smoke and mirrors, and a little bit of additional hardware on the chip, an extra 3 or 4 percent of increased hardware, they are making it look like there are two processors instead of one,'' said Nathan Brookwood, principal analyst at Insight 64, a market research firm and consultancy in Saratoga, California.

This will not only speed up applications, but will prevent computers from stalling when several applications are running simultaneously, Brookwood said.

MULTI-TASKING MADE EASIER

For example, systems can appear to freeze up when a user is multi-tasking, using two applications simultaneously, forcing the processor to switch back and forth between the applications. Examples include surfing the Web when anti-virus software kicks in or sending e-mail while encoding video.

In addition, particular applications tend to be processor hogs, like Microsoft Corp.'s (MSFT.O) Outlook, Brookwood said.

``This creates all sorts of frustration for the user because it looks like the machine is locked up, the cursor won't move and you think the machine is frozen,'' he said. ``The freezing, locking up situation will be dramatically improved as a result of Hyper-Threading.''

The technology will also boost performance of systems running Microsoft Windows XP operating system, Adobe Photoshop and other software that is already ``threaded.''

The new processors are expected to be priced higher than other chips, conceivably as high as $500 to $600, said David Wu, an analyst at Wedbush Morgan Securities in Los Angeles.

As a result, computers using the new chips will most likely appeal to people willing to pay more for the faster speed the chips will offer, such as those doing graphics and using large database applications, Wu said.

At 3 gigahertz, or three billion cycles a second, the new chips offer an incremental increase in clock speed from Intel's current fastest desktop processor, the Pentium 4 processor running at 2.8 gigahertz.