Warren East, chief executive of ARM Holdings, sounded a note of defiance in a developing battle with Intel (NASDAQ: INTC - News) , saying the company would be more than able to defend itself against Intel's attempts to take a share in the market for chips that run mobile phones.

Far from losing out to Intel, Mr East said ARM could challenge Intel in providing chips for the personal computer market, an area that Intel dominates, as demand grows for devices that consume less power.

"Who is to say it will be Intel taking market share from ARM and not the other way?" said Mr East.

"Intel will probably always be able to make a microprocessor that runs faster, but ARM can do one that uses less power. We are still a long way ahead in that."

As information technology companies increasingly embrace a green agenda and try to make their devices less power hungry, Mr East said he was starting to get enquiries from companies making servers and computer chips about the possibilities of using ARM designs in their products.

"It is still very early days, and its not a sector we are proactively pursuing, but some companies are looking at servers based on ARM," he said.

Mr East's comments are in response to recent bullish statements by Intel about moving into the mobile phone market with its new low-power Atom chip. It has previously failed to penetrate this market, but now believes it could supply semiconductors for high-end smartphones as the line between phones and computers blurs.

Mr East insists that ARM, whose chip designs power 98 per cent of the world's mobile phones, has little to fear. However, the company's heavy focus on the "Intel issue" at its recent analyst day in London is seen as a sign of growing concern.

"ARM is clearly paranoid about Intel," said Robert Sanders, an analyst at Dresdner Kleinwort. "It is a very well resourced company and could easily catch up with ARM." Mr Sanders said most mobile phone manufacturers, who had invested heavily in using ARM-based chips, were highly unlikely to switch to Intel's products.

However, Apple, which makes the iPhone, a mobile handset focused on internet browsing, could be tempted by Intel's higher-speed chips, as could RIM, which is focused on e-mail devices. A deal with one of these companies could give Intel the break it needs to get into smartphones.

"It could take some of the opportunity away from ARM in the smartphone market," said Mr Sanders.

Handset manufacturers are expected to sell about 250m smartphones a year by 2010, accounting for about 20 per cent of all mobile phones.