Analysts believes Intel's Atom could be big seller

Analyst David Wong said the Atom chip was an exciting addition and could sell for $25 or more.

He predicted that low-cost computers will be the main sales driver in 2008 and 2009 and he expects Atom's gross margin to match Intel's mainstream desktop and notebook microprocessor chips.

Wong also said there is only a small risk that Atom might interfere with Intel's market for higher-priced microprocessor chips.

"We think the Atom product line could be a good source of incremental growth for Intel," he said, noting that Atom sales are likely to have a near-term neutral-to-positive impact on Intel's margins.

Atom is Intel's smallest chip and is built on what the company says are the world's smallest transistors. It is designed for mobile Internet and low-cost personal computers.

Intel shares rose 35 cents to $24 in afternoon trading.