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Intel hopes to make comeback with low-cost smart phones

In response to the demand for low-cost handsets in China, Intel created a chip designed for cheap smart phones, dubbed Sofia, which will now begin shipping to manufactures. After falling behind competitors, Intel hopes to make up for last year's losses with the new, cheaper option.

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The entrance to Intel's Hawthorne Farm Campus is shown, on July 14, in Hillsboro, Ore. Intel, the world leader in semiconductors, continues to defy the global economic malaise, claiming its best quarter ever Tuesday and upgrading its profit outlook for the rest of the year.

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Intel Corp is shipping new mobile chips that represent the semiconductor company's biggest hope for making progress in smartphones this year.

Responding to a growing market in China for low-cost handsets often priced below $100, Intel announced plans for the chip, code named Sofia, in late 2013 at a meeting with investors.

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"We went from PowerPoint to shipping in 15 months," said Aicha Evans, General Manager of Intel's Platform Engineering Group.

As well as smartphones, the Sofia chip fills a gap in Intel's lineup of chips for tablets.

Over 20 manufactures plan to make devices made with Sofia, with many on display at this week's Mobile World Congress event in Barcelona, Spain, Evans said.

After falling behind in mobile chips, Intel has been rushing to catch up with Qualcomm Inc and Taiwan's MediaTek Inc. Qualcomm said on Monday it will start testing its newest top-tier smartphone chip, the Snapdragon 820, with manufacturers in late 2015.

In a costly strategy that elevated Intel to the No 2 spot in tablet chip market share, Intel last year paid manufacturers some of the engineering cost of developing low-end tablets using another chip, code named Bay Trail, that it originally had designed for more expensive devices.

Intel has declined to say how much it paid tablet makers to use its Bay Trail chips, but it's mobile unit had a loss of $4.2 billion last year, worse than its $3.1 billion loss in 2013.

Intel believes the new Sofia chips are ideal for the fast-growing, low-end smartphone market in Asia and has said it does not plan to use costly subsidies to sell the chips this year.

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The Sofia chips currently shipping have 3G features for low-end phones, and 4G versions for pricier smartphones will be released later this year, the company added.