The company didn't just decrease the transistor size to 65nm, they also developed a process to alter the way how silicon behaves by placing a layer of insulator underneath a layer of silicon less than 500 atoms thick.
"You literally can squeeze silicon, and thereby give it properties to make it faster. The thing that is making it run faster is not just that it's smaller but because you're changing its basic physical properties," Meyerson told Reuters.More details about the Power6 over at CNN.