China has begun manufacturing its latest home-grown microprocessor, which boasts speeds of 1.0 gigahertz and could significantly lower the cost of computers.

The chip, dubbed the Godson IIE, was produced by the Institute of Computer Technology under the state-run China Academy of Sciences, China Central Television reported.

The chip is now in mass production and will hit the markets later this year for a price of about 1,000 yuan (125 dollars) each, the report said.

Speeds of 1.0 gigahertz means that the 64-bit chip is capable of making 4.0 billion calculations per second, Li Guojie, director of the institute, told the official Xinhua news agency.

"Its calculation capacity is twice as fast as the previous version," Li said.

China possesses the full intellectual property rights for the new chip, Li said, meaning that it has been entirely developed by Chinese engineers.

Only the United States and Japan has the capabilities to manufacture such chips, he said.

Development of the chip has been driven by government efforts to produce cheap but quality computers, affordable to hundreds of millions of Chinese.

The cost of the chip is expected to substantially reduce the price of Chinese-made computers, reports said.

The first Godson II series of chips came out last year, capable of supporting both Linux and Microsoft operating systems, the reports said.