Intel Wins Nokia As Mobile-chip Customer

Intel Corp., the world's largest chipmaker, will sell processors to Nokia Oyj for mobile devices, marking the biggest breakthrough in Intel's expansion into the phone market.

The two will develop a new mobile device and chips, Intel and Nokia said today in a statement. Intel will also get mobile- phone radio technology from Nokia and the companies will develop versions of the Linux operating system for mobile devices.

Intel, whose microprocessors run more than 80 percent of the world's personal computers, has struggled for about a decade to get a foothold in the market for mobile-phone chips. The company has a unit that sells a scaled-down version of its personal-computer processor. The chip, called Atom, is designed for mobile devices that access the Web and handle basic computing functions.

"Even if they get just a piece of Nokia's business, it's a big deal," said Will Strauss, a Cave Creek, Arizona-based analyst for research firm Forward Concepts. "Nokia is still the biggest cell-phone maker in the world."

In 2006, Intel Chief Executive Officer Paul Otellini scrapped his predecessor's $5 billion investment in chips for mobile devices, after the company was late to the market and failed to win enough customers.

Restarted Effort

Now Otellini is again pushing to get Intel's chips into phones, a bid to lessen the company's reliance on computers, which account for more than 90 percent of sales. A total of 1.21 billion mobile phones were sold globally last year, according to ABI Research in Oyster Bay, New York.

Intel rose 3 cents to $15.71 at 11:18 a.m. New York time in Nasdaq Stock Market trading. The stock had gained 7 percent this year before today. Nokia, based in Espoo, Finland, fell 10 cents to 10.19 euros in Helsinki trading.

Intel Chief Financial Officer Stacy Smith said in February that the company needed to land one of the top five mobile-phone makers if it wanted to build a significant business.

Intel is challenging Texas Instruments Inc., the largest maker of chips used to run programs in mobile phones. San Diego- based Qualcomm Inc., meanwhile, supplies the majority of communications chips for phones. Both companies have said that Intel would struggle to break their dominance because its products use too much power.

Intel announced in February it had landed LG Electronics Inc., the world's third-largest phone maker, as a customer. LG will use an Intel processor to make a mobile Internet device, a cross between a mobile phone and a computer.

Intel's attempts to create a mobile business have foundered in the past, even when they've had announcements of interest from customers, said Jim McGregor, an analyst at Scottsdale, Arizona-based research firm In-Stat.

"They've been dreaming of getting a significant win at Nokia," he said. "It's a big announcement, they're a key guy. The only question now is whether they will actually come out with a product."