Feb. 21 (Bloomberg) -- Intel Corp., the world's largest computer-chip maker, will begin selling processors designed for portable computers costing as little as $250.

The processor will debut in computers called Netbooks by the middle of the year, said Uday Marty, a marketing director at the Santa Clara, California-based company.

The product is part of Chief Executive Officer Paul Otellini's plan to create new markets for the company, whose processors power more than 70 percent of the world's personal computers. Intel expects to sell tens of millions of the new chips by 2011, Marty said.

``It's our vision to bring computing to the next billion and a half users,'' Marty said in an interview. ``We've never tackled this market with purpose-built silicon before.''

Intel is targeting markets such as Brazil, Russia, India and China, Marty said. Computers that use the chips will be similar to Asustek Computer Inc.'s Eee PC, a laptop with a 7-inch (18- centimeter) screen and shrunk-down keyboard.

While the devices are designed to be affordable to people who haven't previously been able to buy computers, consumers in North America and Western Europe may also be interested in them as secondary machines, Marty said.

The processor will have about 50 percent of the computing power of Intel's low-end Celeron models. That's sufficient to run most programs, Marty said. It won't allow users to run several programs at the same time, he said.

`Diamondville'

The chip, called Diamondville, is designed specifically for low-cost computers. While it sells for less than other Intel products, it also costs less to make, meaning the company's profit margins won't suffer, Marty said.

Intel's gross margin, or the percentage of sales remaining after subtracting the cost of production, was 58 percent in the fourth quarter. Analysts use the measure as an indicator of how efficiently Intel is running plants and pricing its products.

Intel declined 8 cents to $20.30 in Nasdaq Stock Market trading at 4:30 p.m. New York time. The stock has fallen 24 percent this year.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

Last Updated: February 21, 2008 16:47 EST