Microsoft Corp will introduce a version of its Windows operating system compatible with chips designed by Britain's ARM Holdings, as the software company tries to grab a slice of an exploding market for tablet computers.

The move marks a shift from Microsoft's long-time alliance with chipmaker Intel Corp, whose chips have been the mainstay of Windows operating systems on personal computers.

High-powered, low-battery chips made by ARM dominate the smartphone and tablet markets, featuring for instance in Apple Inc's iPhone and iPad.

Shares of ARM shares rose 7.7 percent on the London Stock Exchange ahead of the announcement. Microsoft shares edged 0.3 percent lower to close at $28.

(Reporting by Bill Rigby; Editing by Gary Hill)

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