Intel wants to be inside the iPhone

Intel is hoping to entice Apple with its new focus on Smartphone chips, as revealed by Intel CEO Paul Otellini, during the company's annual investor day.

Intel only entered the smartphone market last month but it plans to quickly release chips that improve performance and power efficiency on smartphones. The new chips will be based on new manufacturing processes that bring longer battery life and improve performance on smartphones.

"Our job is to insure our silicon is so compelling, in terms of running the Mac better or being a better iPad device, that as they make those decisions they can't ignore us," Otellini said at an annual investor day last week, reports Forbes.

Apple currently uses Intel processors in its notebook and desktop computers, but has chips of Intel rival ARM (NASDAQ:ARMH) in the iPhone and the iPad. Intel's major smartphone rival is ARM, whose processors ship in around 95 percent of the handsets. Intel's CEO Paul Otellini said though Intel is a new entrant in the smartphone space, it could take away market share from ARM.

Intel later this year will release a high-performance Atom Z2580 smartphone chip, which will have a dual-core processor and LTE 4G capabilities. The chip will provide twice the performance of the company's current single-core Atom Z2460 chip, which is found in Xolo's X900 smartphone with 3G capabilities. Both the chips are made using the 32-nanometer process.

Next year the company will release a low-power Atom chip code-named Merrifield for high-performance smartphones. The chip will have a new processor design and graphics core, and deliver a more "immersive experience" than today's smartphones, said Mike Bell, general manager of Intel's Mobile and Communications Group.

Otellini said the smartphone chip development over the next two years will go at twice the pace of Moore's Law, which states that the number of transistors in a chip doubles every two years.

"We're increasingly bringing the best of Intel technology to mobile devices - phones and tablets," Otellini said.

(Article includes additional reporting by Agam Shah, IDG News Service)