May 29 (Bloomberg) -- Toshiba Corp., the world's fourth- largest maker of notebook computers, plans to use Advanced Micro Devices Inc. computer microprocessors in some of its laptops, ending an exclusive agreement with Intel Corp. since 2001.

Toshiba will use Advanced Micro's chips in about 20 percent of laptop models sold in the U.S. and Europe, Tokyo-based spokeswoman Junko Furuta said by phone today, confirming a report in the Nikkei newspaper. The microprocessors, which are the main brains of computers, will be used for Toshiba's low-priced models from this summer, she said, declining to be more specific.

The decision means Intel is no longer the sole chip supplier to the world's top laptop makers. Hewlett-Packard Co. and Dell Inc., the world's two largest personal-computer makers, already sell models with Advanced Micro chips. Taiwan's Acer Inc., the third-largest manufacturer, also uses Advanced Micro chips.

``The use of Advanced Micro's chips will lead to a reduction in procurement costs,'' Yuichi Ishida, an analyst at Mizuho Investors Securities Co., said. ``Lower costs and a possible increase in sales during the Christmas season may help improve profitability at Toshiba's computer business.''

The Nikkei reported today that Toshiba could cut parts- procurement costs by more than 10 percent from using Sunnyvale, California-based Advanced Micro chips. Furuta declined to comment on procurement costs.

`Good Practice'

``It's generally good practice for a major company such as Toshiba, which is a strong presence in the laptop area, to have dual sources,'' Derek Lidow, chief executive officer of research firm iSuppli Corp., said today in a television interview. ``It reduces the risk in supply chain'' and creates more competition.

Laptops delivered to the U.S. and Europe account for about 60 percent of total shipments, Toshiba spokeswoman Furuta said, declining to say how many laptops Toshiba ships annually.

``Using chips from Advanced Micro will allow Toshiba to expand its product line-up,'' she said.

Toshiba forecasts its laptop sales will increase 2.9 percent to 1 trillion yen ($8.2 billion), or 13 percent of the projected total revenue of 7.5 trillion yen, for the 12 months ending March. Operating profit, or sales minus the cost of goods sold and administrative expenses, is expected to jump 74 percent to 12 billion yen, it said.

The company, also the world's second biggest maker of NAND flash memory after Samsung Electronics Co., said sales from semiconductors will increase 4 percent to 1.35 trillion yen in this fiscal year, while operating profit is projected to decline 14 percent to 110 billion yen.

Toshiba in the late 1980s invented the NAND flash used to store data storage in mobile phones, digital cameras and portable music players.

Shares of Toshiba rose 1.2 percent to 908 yen at the close on the Tokyo Stock Exchange, compared with a 0.5 percent gain for the benchmark Nikkei 225 Stock Average.

To contact the reporters on this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net

Last Updated: May 29, 2007 02:14 EDT