San Francisco/Taipei - Intel Corporation and the Taiwan Semiconductor Manufacturing Corp announced Monday a deal that will allow the Asian firm to produce Intel's smallest chips for use in mobile phones, netbook computers and other devices.

The two companies signed a memorandum of understanding to collaborate on technology, intellectual property and other issues related to Intel's Atom chip, the US company said at its Santa Clara, California headquarters.

Intel said the move would broaden the market for the chip and speed its use in various products.

"We believe this effort will make it easier for customers with significant design expertise to take advantage of benefits of the Intel architecture in a manner that allows them to customize the implementation precisely to their needs," Paul Otellini, Intel president and chief executive, said in a statement.

The Atom processor is used in mobile internet devices, smartphones and small netbook computers that allow users to access the internet from anywhere.

Intel typically designs and produces its own chips and does not outsource its manufacturing to other companies.

According to the Taipei Times, this not only marks the first time that Intel, the world's largest chipmaker, has outsourced its processor manufacturing but is an important contract for TSMC for entering the contract manufacturing market for processors. dpa