Small, inexpensive, power-efficient new chips from Intel and ARM are enabling the new wave of mobile devices - and setting the two companies on a collision course.

Over the past quarter of a century, Intel has become the leader when it comes to microprocessors. The company has covered every mark, from desktops to laptops and CPU's. Even Apple has joined the choir.

But CEO Paul Otellini isn't content to stop there. He envisions a world in which Intel chips power every device, from the grandest server to the humblest media appliance - a "continuum of computing" that spans many tiers of processor power, all united by Intel's x86 architecture.

Key to this vision is Atom, the most recent entry in Intel's processor line. Compact and extremely energy-efficient, Atom is already the leading CPU for netbook computers.

With its latest, ultra-low-voltage versions of the chip, Intel is poised to take x86 even further down Otellini's continuum, away from PCs and into the world of handsets, media players, smart TVs, and other digital electronic devices.

It won't be easy. Intel may be the reigning king of PCs and server CPUs, but in the world of mobile devices, that title goes to an unlikely rival: a small, unassuming company called ARM Holdings, based in Cambridge.

Most consumers have never even heard of ARM. You won't see ARM ad campaigns in magazines or on TV. There are no stickers proclaiming 'ARM Inside!'.

The company employs fewer than 1,800 people, and at $3bn, its market capitalisation is a mere fraction of Intel's. But make no mistake - ARM and Intel are on a collision course. What happens next could determine the shape of the computing industry for years to come.

The next digital frontier

The stakes are high in the market for electronic devices, but the opportunity is massive.

Consider: Intel sold its 1 billionth x86 chip in 2003. Its closest rival, AMD, broke the 500 million mark just this year.

ARM, on the other hand, expects to ship 2.8 billion processors in 2009 alone - or around 90 chips per second. That's in addition to the more than 10 billion ARM processors already powering devices today.

Pick up any mobile phone and there's a 95 percent chance it contains at least one ARM processor. If the phone was manufactured in the past five years, make that 100 percent; that goes for standard handsets as well as smartphones.

The same is true for portable media players. Whether the label says Archos, iRiver or Sony, inside it's ARM.

You'll also find ARM chips in wireless routers from Linksys and Netgear; printers from HP and Lexmark; GPS devices from Garmin and TomTom and countless other devices.

Every one of these applications is a potential opportunity for Intel, but until recently x86 chips were generally considered too power-hungry - and too expensive - for use in embedded applications. Atom is changing that, but Intel still needs to convince device manufacturers that it can be as good a partner as the existing ARM-based ecosystem.

Mobile phone buying advice

See all mobile phones reviews

NEXT PAGE: ARM: The mouse that roared

  1. Which company will come out top?
  2. ARM: The mouse that roared
  3. Intel enters the Atom age
  4. The compatibility question
  5. Intel: A babe in the woods?
  6. Let the chips fall where they may