Intel and the Taiwan government plan to open a development center to further the Linux-based Moblin OS for devices such as netbooks and mobile Internet devices (MIDs), they jointly announced on Thursday.

Intel, the world's largest chip maker, created Moblin to use with devices that run on Intel Atom microprocessors. The open source software includes a Linux kernel, a user interface, a browser, developer tools and other resources that Intel will continue to optimize as part of the agreement with the Taiwan government.

The new development center will be based in Taiwan so local device makers, including Acer and Asustek Computer, can make use of the software in their products. Netbooks made by the two companies, for example, come with either Microsoft Windows XP or a Linux OS currently. The new Moblin center aims to become a widely used OS for devices such as these and smaller gadgets that allow people wireless access to the Internet.

"The hottest thing going on in the computer industry today is the netbook phenomenon, and it started in Taiwan," said Intel CEO Paul Otellini at a news conference in Taipei.

The new Moblin development center will open in December, said Yiin Chii-ming, Taiwan's Minister of Economic Affairs.

The joint effort appears to be a swipe at Microsoft. Taiwanese companies in particular have called for the development of a community based around the Linux OS for netbooks because of Microsoft's plan to retire Windows XP in favor of Vista.

Vista is a problem in smaller devices because it requires more expensive components than XP, which would raise the price of a netbook. It also boots-up and runs slower on such devices compared to XP and Linux OS offerings.

Linux is also less expensive due to easier hardware requirements and there is no license fee for the OS.

Microsoft has worked to make XP available for netbooks and other devices, even extending XP's life beyond traditional norms for the company. XP will continue to be sold on certain systems meant for businesses until June 30, 2009, and on ultra-low cost PCs through June 30, 2010.

The company has also tweaked XP to run on the One Laptop Per Child association's XO laptop. The XO was designed around a Linux OS.

Despite the efforts, an XP license still makes netbooks and other low-cost laptops more expensive than Linux models. In addition, some companies have complained about Microsoft rules requiring them to use XP only in netbooks that fit certain requirements, such as limiting the screen size to 10 inches large and not allowing touchscreens. They also want Microsoft to support XP beyond its promised dates.