The companies said they would work together on a new class of mobile computing devices, but would not say when they would come to market or give details on the kind of wireless products they hoped to develop together.
Under the agreement, announced Tuesday, Intel said it will buy intellectual property from Nokia related to high-speed wireless technology. The two companies also said they plan to collaborate on open-source mobile Linux software projects.
Analysts said the deal gives Intel a chance to take on leading cellphone chip makers Qualcomm Inc
Intel at least has its foot in the door. It's an important and strategic customer, said Gartner analyst Jon Erensen, who sees the partnership as a way for Intel to get into the market for advanced phones known as smartphones.
But this would take time. You're probably talking about something like 2011 before you get down to the power consumption and integration (levels) you'd need for that kind of device, Erensen said.
Intel, whose microprocessors are found in eight out of 10 personal computers, already works with LG Electronics <066570.KS> on mobile devices. The agreement with Finland's Nokia, the world's largest cellphone maker, is a bigger step, analysts said.
The alliance could mean stiffer competition for ARM Holdings Plc
TI and Qualcomm integrate their own baseband chips, which connect mobile phones to wireless networks, with ARM processors, which run a cellphone's operating system software. TI and Qualcomm also make application chips to support advanced features such as video and Web surfing.
Intel already sells chips for netbooks -- small, no-frills computers good for Web surfing -- and Nokia has said it would look into the possibly of expanding beyond phones to develop netbooks.
The pact may help Nokia compete with rivals such as iPhone from Apple Inc
Erensen said that to get Intel chips into devices smaller than netbooks, it should develop applications chip technology to integrate with the Nokia technology it is licensing.
The companies said they aimed to define a new mobile platform beyond today's smartphones, notebooks and netbooks for hardware, software and mobile Internet services.
They stressed that the announcement was about their technology collaboration and not about specific products.
We are not detailing it out and it is almost premature to say at this stage, Kai Oistamo, Nokia's executive vice president for mobile devices, said on a conference call with analysts and reporters.
Nokia's U.S. shares were up 32 cents, or 2 percent, at $14.40 in afternoon trading on the New York Stock Exchange. Intel shares were up 12 cents, or 0.8 percent, at $15.80 on Nasdaq.
You're not going to see a big response on it yet because they didn't give any color in terms of timing or the particulars, said Patrick Wang, vice president at brokerage Wedbush Morgan. Longer term, this is going to be an important partnership although... we still have to see the companies execute and the products they introduce have to gain traction in the marketplace.
(Reporting by Sinead Carew and Clare Baldwin; Editing by Tim Dobbyn)