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Intel's mobile unit snags win in US, but still an underdog

The new $200 Asus PadFone X Mini will become the first Intel-powered smartphone with LTE technology sold in the US.

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The $200 PadFone X Mini, with its companion tablet. Intel

Intel finally gets its break in the US mobile device market, courtesy of Taiwanese device manufacturer Asus.

The chipmaker said Tuesday that it will power the Asus PadFone X Mini , a smartphone-tablet hybrid that will be offered for $200 without a contract exclusively on AT&T. Inline with Asus' Russian Nesting Doll strategy for its devices, the 4.5-inch smartphone can dock directly into a companion 7-inch tablet, providing two screen sizes for one device. (The tablet comes as part of the price, but doesn't work without the phone docked inside it.)

Intel's win marks a small but significant step forward in its push to be a legitimate supplier of chips to mobile devices. The PadFone X Mini represents the first time its processor was used in the US for a smartphone with high-speed 4G LTE wireless technology. Right now, the US market is dominated by Qualcomm and its Snapdragon line of processors.

"We are certainly optimistic about this product," Hermann Eul, a vice president of Intel's mobile and communications business, said in an interview. "It is important for us that we could check off being in the US, being on the AT&T network -- so these are important milestones for us."

Intel still has a lot of work to do in the mobile business. Earlier Tuesday, the company posted a $1 billion loss in the unit despite overall revenue and profit narrowly exceeding expectations. Asus, meanwhile, isn't a major player in the US, and Intel is a long way off from providing chips to the flagship smartphones of market leaders such as Samsung Electronics or Apple.

Intel dominates PCs and server systems but has struggled against Qualcomm when it comes to mobile devices. So far, Intel has managed to get its mobile processors or modems into just a handful of notable products, including the Samsung Galaxy Alpha smartphone in Europe and Asia, as well as the Samsung Galaxy Tab S tablet in the US. Many of its mobile sales are going to entry-level tablets, though it's had to offer subsidies to manufacturers as part of the deals.

The new Asus device will be available on AT&T's GoPhone prepaid plan starting October 24. It will be sold at AT&T retail locations and several national retailers, including Target, Walmart, Amazon, Fry's and Tiger Direct. The smartphone uses both Intel's XMM 7160 LTE modem and Atom processor. The PadFone X Mini the little brother of the Asus PadFone X , which is powered by a Qualcomm processor and became available exclusively on AT&T in June.

Despite heavy losses in its mobile-chips unit, Intel last month showed its commitment to bolstering that business by agreeing to pay $1.5 billion for a 20 percent stake in two Chinese mobile-chip makers owned by the government of China. The deal, which will be focused on smartphone chips, comes after Intel in May entered a strategic deal with Chinese chipmaker Rockchip to help Intel push into entry-level tablets. With both deals, products won't start shipping until next year, so a turnaround in the mobile business could take time.