SAN JOSE, Calif. (AP) _ Intel Corp. has boosted the storage capacity of its sleek ''flash'' memory cards for small portable computers fivefold, making the invention a viable alternative to bulky disk drives.

The new credit card-sized product, introduced today, can hold 20 megabytes of memory compared with 4 megabytes on Intel's first flash card. A megabyte is about a million bits, or the smallest piece of computer data.

''Our first flash card, announced about a year and a half ago, was kind of like a Model T,'' said Richard Pashley, general manager of Intel's memory components division, referring to an early automobile model. ''People liked it, but they said, 'Gee, it would be wonderful if it had at least 20 megabytes.'''

Pashley predicted that because the technology is developing quickly, a flash memory card might store a half a gigabyte - or about a billion bits - by the year 2000, which is enough for large and powerful computers.

Typical notebook-sized personal computers have disk-drive capacities ranging from 30 megabytes to 60 megabytes. The 20 megabyte Intel flash card is aimed at users of smaller sub-notebook and ''palm-top'' computers.

''Flash'' memory cards save information when a computer is turned off, acting as a storage device in place of hard disk drives. In addition to saving weight, the cards use much less battery power than disk drives, so portable computers can be used for longer periods.

Intel also plans to price the new memory card competitively, in the $600 range, compared to its 4 megabyte product, which cost $1,200 when it was introduced, Intel spokesman Howard High said.

Michael Murphy, editor of the California Technology Stock Letter, said Atmel Corp. of San Jose and a few Japanese companies are the main Intel competitors in the emerging market that hit about $130 million this year. Analysts predict that market could grow to $1.5 billion by 1995.

''This is a fast-growing market because there are so many good uses for flash memory cards,'' Murphy said. ''You can put them in small computers that don't have room for a drive and where you want extended battery life. You can also put them in specialized stuff, like military applications, where there's a lot of vibrations that could mess up a disk drive.''

Disk drives, which have moving parts and require assembly, won't be replaced by flash memory cards, however, because larger computers that handle lots of information need lots of storage space, Murphy said.

Santa Clara-based Intel is better known for its microprocessors, which serve as the controlling ''brains'' of most IBM-compatible personal computers.