HONG KONG (Reuters) -- Chip giant Intel Corp, a relative bit player thus far in the cellphone revolution, is making its first serious foray into chips that lie at the heart of handsets and has enlisted a handful of mid-tier Asian firms to use its design.

But Intel, taking on entrenched rivals such as Texas Instruments Inc and Analog Devices, must win over top phone makers such as Nokia if it is to become a key supplier for handsets that are becoming more like computers.

"If you look at the (market) for cell phone silicon, it's in the tens of billions of U.S. dollars, and we intend to be a significant player in this space," Joe LaValle, group sales director for Intel's wireless communications and computing group told Reuters in a telephone interview.

"This is an opportunity to significantly add to Intel's revenue stream," he said, without giving estimates.

The company unveiled a new high-tech chip, called the PXA800F, on Thursday.

The chips are designed for a new generation of phones that allow for high-speed data transmission such as online games and videoconferencing. The first models using it could appear later this year, with large-scale production likely in the first half of 2004.

Asian firms that have endorsed Intel's new "base band," the industry word for the central chip at the heart of each cell phone, include Taiwan's MiTAC and Wistron, Korea's Maxon and China's Ningbo Bird, TCL and Legend Group

"They're endorsing the concept of integration, endorsing the technical concept," LaValle said.

Intel is also in talks about incorporating the chips into future handsets from the world's top five makers: Nokia, Motorola , Samsung, Siemens and Sony Ericsson. None has formally endorsed the chips, but all buy other Intel products used in cell phones, primarily flash memory and applications processors.

The new chips are considered groundbreaking because they combine a central processor, applications processing and flash memory on a single chip -- a move that not only standardizes those three key functions but also saves battery power.

Texas Instruments plans a similar integrated chip, but has said it will not be available until next year.

Computing cell phones
Intel's wireless communications and computing division contributed US$2.24 billion to the company last year, or about 8.4 percent of the company's US$26.76 billion in total revenues.

Intel expects the models to retail for a relatively modest US$100 to US$200 each, after subsidies and rebates.

Analysts said Intel's entry into the market reflects the growing importance of cell phones in the computer world as the two products start to converge.

Like Intel, software giant Microsoft has developed an operating system for next generation mobile phones, and has said it considers such software to be one of its key business areas for the future.

"These new capabilities are transforming the market and bringing non-traditional players into it," said Connie Hsu, an analyst at Pyramid Research.

The new Intel chip also marks important progress in helping to standardize phones, allowing better interoperability between systems, said John Ure, director of the telecommunications research project at the University of Hong Kong.

"At the moment you buy a processor that can't do too much, so as a manufacturer you have to design all kinds of bits and pieces into the handset that will carry all kinds of contents that network operators want to provide," he said.