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Intel snags $2 billion contract with Siemens

The chip giant will supply the German manufacturing giant with flash memory and other technology for wireless devices.

Intel has landed a $2 billion contract with Siemens to provide the German manufacturing giant with flash memory and other technology for wireless devices.

Under the deal, Siemens has committed to buying $2 billion worth of Intel flash memory over the next three years. In addition, the companies have agreed to develop new wireless devices using Intel components based partly on Intel's Personal Internet Client Architecture (PICA).

The wireless market has become a major obsession for Intel. In December 1999, the company formed a wireless product group headed by Senior Vice President Ron Smith.

In September, the company released PICA, a collection of blueprints that manufacturers can use for free to build wireless devices. PICA designs revolve largely around Intel silicon, including the company's flash memory chips, its digital signal processors co-designed with Analog Devices, and XScale, its low-voltage processor based on designs from England's ARM Holdings.

With the new deal, Siemens becomes the second large manufacturer to announce plans to design products in conjunction with Intel. Mitsubishi is designing cell phones with Intel based on substantial technology involved in PICA. Other Asian cell phone manufacturers are also looking at adopting parts of PICA.

Texas Instruments and Motorola are busy promoting similar, competing technology blueprints.

Intel's flash memory will be used in a variety of devices but particularly in cell phones. In recent years, Siemens has shifted its strategy to nab more cell phone market share.

"Siemens is one of the world's fastest-growing manufacturers of mobile phones, and currently occupies fourth place with a market share of about nine percent,'' Rudi Lamprecht, a member of Siemens's board, said in a statement. "By entering into the supply contract with Intel, we have ensured our ability to respond in the best possible manner to the market demand for Internet-capable, mobile devices over the next few years.''