Intel and Google have announced a partnership strategically planned to bolster their respective business while challenging Apple's iPhone in the burgeoning smartphone market.

Intel, the world's largest chipmaker, rolled out its low-power Medfield Atom tablet chip running on a tablet deploying Google's Android OS.

Google, which released the open-source Android OS in 2007, is planning its own $12.5 billion foray into the smartphone market by acquiring Motorola Mobility. Market researchers IHSiSuppli estimate Android dominates the global smartphone market with about a 34 percent share in the second quarter compared with Apple's 18 percent. Google, based in Mountain View, Calif., said it wants to boost its share.

Apple iPhones use chips devised by Britain's ARM Holdings, rather than Intel products. Under former CEO Steve Jobs, Apple long depended upon other chip suppliers including IBM and Motorola, then Freescale Semiconductor, and others for all its chips before finally allowing some Macs to run on Intel products starting in 2006.

Earlier this week, Microsoft introduced its Windows 8 for tablets and said they would be compatible with ARM designs for the first time. They also will be Intel-compatible.

Jobs specifically complained that Intel processors wasted too much energy. Last month, Santa Clara, Calif.-based Intel announced an Omnibook project to focus on low-power chips for future smartphones and tablets like Apple's iPad.

Intel CEO Paul Otellini hailed the alliance at an Intel developers meeting along with Google mobile VP Andy Rubin. Intel is off and running in the smartphone business, the Intel chief said, with big Atom shipments scheduled for early 2010.

Intel shares were unchanged at $20.76 and Google shares fell $2.42 to $527.08 in early Wednesday trading.

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