While Arm-based chips are already established in small tablet devices like Apple's iPod Touch and the Nokia N800, Intel has the advantage in mini-notebooks. Besides having an early lead with the Eee PC and other products, device makers who use Intel chips have more choices for software, including the Windows XP OS, which doesn't currently run on Arm devices.

TI is focussing its efforts on Linux, Madhavapeddy said. Asked if the company has tried in its labs to run Windows XP on its OMAP processors, he declined to comment.

TI's OMAP 3 has four processor cores on a single chip, including the Cortex-A8 and three discrete cores for multimedia, graphics and image processing. That allows the chip to play high-definition video or render 3D images for gaming, while fitting into small devices, Morris said.

Arm now sees Intel as a more direct competitor, and in response is trying to build a more complete software ecosystem around its products, Morris said. MIDs typically include PC-like functionality, including a full Web browser and productivity tools, despite their small size.

A reporter at the press conference noted that Arm has talked less in the past about competing directly with Intel. "We were quiet last year, and we sat internally and thought about this for a while, and we are now no longer being quiet," Morris said.

The rivalry may not end at handheld devices, either. Morris said server manufacturers looking to reduce power consumption in their products have approached Arm about possibly using its chip designs in their servers.

(Dan Nystedt in Taipei contributed to this report.)