Intel, whose chips are the brains in 80 percent of the world's PCs, is rushing to improve the power consumption of its mobile processors with new chips for tablets and smartphones.
To put advanced mobile chips on the market more quickly, Otellini said Intel would increase the pace of implementing new manufacturing technologies. Intel currently adopts new manufacturing technology every two years.
This month, Intel took the wraps off next-generation technology that crams more transistors onto microchips, betting it will eventually become a significant advantage in tablets and smartphones, where Qualcomm, Texas Instruments and Nvidia are key players and use ARM.
Intel claims the "3D" new manufacturing process delivers as much as a 37 percent jump in performance while consuming less electricity -- a key ARM selling point.
"To be fair, process technology is just one important element of winning for Intel, but it is a major advantage and one we suspect the Street is underestimating," Raymond James analyst Hans Mosesmann said in a note to clients.
ARM Chief Executive Warren East told the Reuters Technology Summit on Tuesday that Intel's move to 3D technology would not affect plans by ARM's partners to manufacture smaller, more powerful chips.
Concern about Intel's lack of progress in the mobile segment has weighed on its stock, which is trading at 10 expected annual earnings, much cheaper than peers like Texas Instruments at 13 times and Advanced Micro Devices at 14 times.
The market for mobile chips is still tiny compared to Intel's PC processor business, but investors expect it to grow quickly.
Smartphones using Intel's new Medfield chip will go on sale early next year, executives said.
"With Medfield we're in the power envelope for phones ... We're working with several customers and we start to expect to see the revenue ramp toward the end of this year," Chief Financial Officer Stacy Smith said.
In April, Intel introduced a new chip for tablets, codenamed Oak Trail, and said it will be used in more than 35 upcoming tablets and hybrid computer devices made by companies including Fujitsu and Lenovo.
