Intel Says Motorola, Lenovo to Use Its Processors in Smartphones

Intel Corp. (INTC), making headway on a decade-long effort to sell mobile-phone chips, said Lenovo Group Ltd. (992) and Motorola Mobility Holdings Inc. (MMI) will start using its processors in smartphones this year.

Lenovo, a personal-computer maker pushing into the smartphone business, will begin selling its model in the second quarter, Intel said yesterday at the Consumer Electronics Show in Las Vegas. Motorola Mobility, which is being acquired by Google Inc. (GOOG), plans to roll out its device in the second half. Both models will run Google’s Android operating system.

For Intel Chief Executive Officer Paul Otellini, the announcement marks a breakthrough in his attempt to parlay the company’s dominance in PCs into a foothold in mobile phones. Even after years of targeting the market, there are no phones currently on sale that are based on an Intel microprocessor.

“There’s a lot of excitement and innovation around Intel technology in smartphones,” Otellini said. The company’s so- called reference design -- a test model based on its chips -- compares favorably in several performance areas to smartphones available today, he said.

The new phones will use Intel’s Atom chip, a scaled-down version of a processor designed for PCs. Lenovo’s phone, called the K800, will go on sale in China running on China Unicom (600050)’s network. Intel’s chips also will power a Lenovo tablet device.

Long-Term Relationship

Intel, based in Santa Clara, California, said its relationship with Motorola Mobility will lead to multiple phones and tablets over a number of years.

The move into smartphone chips sets up a showdown with Qualcomm Inc. (QCOM), the biggest seller of processors for the devices. Intel also is challenging a technology standard developed by ARM Holdings Plc that Qualcomm and other chipmakers license.

Qualcomm, meanwhile, is waging a counterattack on Intel’s PC turf. Its CEO, Paul Jacobs, also was at the electronics show yesterday, demonstrating a tablet based on his company’s new Snapdragon S4 processor. The device will run Microsoft (MSFT) Corp.’s Windows 8 operating system.

“This is a game changer,” Jacobs said. “Our leadership with Snapdragon is really enabling us to work with PC manufacturers to deliver the lightest and thinnest PCs that are always on.”

Microsoft’s Shift

Microsoft, the world’s top software maker, helped Qualcomm enter the PC market by letting Windows run on a broader range of chips. After years of working exclusively with Intel’s x86 technology, in a partnership known as “Wintel,” Microsoft’s planned Windows 8 operating system will also support designs from ARM.

Warren East, CEO of Cambridge, England-based ARM, doesn’t expect Intel to overtake companies using his technology.

“We’re going to see some Intel chips in smartphones for sure,” he said yesterday on “Bloomberg West.” “But we actually see the ARM partnership in the lead and likely to stay there.”

The market for mobile-phone chips will grow 40 percent to $29.9 billion by 2015, according to the Linley Group. That’s outpacing the PC processor industry, where Intel controls more than 80 percent of sales. While Intel previously announced deals with Nokia Oyj and LG Electronics Inc. to create phones, the devices never came to market.

Intel shares rose less than 1 percent to $25.59 yesterday before the announcement. The stock gained 15 percent last year. Qualcomm, up 11 percent in 2011, fell less than 1 percent to $55.75 yesterday.

To contact the reporters on this story: Danielle Kucera in San Francisco at dkucera6@bloomberg.net; Ian King in San Francisco at ianking@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.