As the market for small, low-cost laptops grows, Intel increasingly finds itself competing against Taiwan's Via Technologies rather than its traditional rival, Advanced Micro Devices.

"They are definitely going into our business," said Glenn Henry, president of Centaur Technology, the Via subsidiary that designs its line of processors.

Intel's focus on the low-cost laptop segment is a mixed blessing for Via. On the one hand, Via will have to battle Intel for deals with laptop makers, but Intel's marketing efforts help to grow the overall market, creating more opportunities for the Taiwanese chip vendor.

"Maybe they'll take some of our business, maybe they won't. But what they will do, they will increase the size of that business," Henry said. "That's generally very good for us. We'd be very happy to be No. 2 in the x86 world."

Compared to Intel, Via is a financial minnow and ranks third in the x86 processor market, behind Intel and Advanced Micro Devices (AMD). The Taiwanese chip vendor had cumulative sales of NT$13.8 billion -- or $453 million -- during the first nine months of 2007, the most recent figures available. By comparison, Intel's revenue for the third quarter of 2007 alone was $10.1 billion.

Intel also leads Via in technology, producing high-end desktop and mobile chips that outperform Via's processors. Those high-end chips also consume more power and cost much more than Via's offerings, making them unsuitable for the low-cost laptop segment.

The performance of Via's C7 processors is no match for the top-of-the-line chips produced by Intel and AMD, but the low-power capabilities of the chip allowed Via to carve out a comfortable niche for itself that was largely ignored those companies. But with the impending release of Atom, and the earlier launch of a related chip platform called Centrino Atom, that niche is suddenly a bit more crowded.

The Diamondville version of Intel's Atom processor is set for release on Tuesday. The new processor is the first that Intel specifically designed for small, low-cost laptops. These laptops don't require the high performance of mainstream mobile chips, such as Intel's Core 2 Duo, and existing systems are based on the Celeron M processor or a C7-M chip instead.

To stake out its territory in the low-cost laptop market, Intel has been offering a comparison of systems based on Atom and Celeron-M against two Via-based systems.

The comparison, a copy of which was obtained from a large Taiwanese hardware maker and marked for release only under a non-disclosure agreement, compares computers based on Intel's chips, like Asustek Computer's Eee PC, against the C7-M based Everex CloudBook and an unnamed system that appears to be Hewlett-Packard's Mini-Note 2133.

An Intel spokesman declined to comment on the presentation.

Besides existing products based on Intel chips, the presentation compared the Via-based systems against an Intel reference design called Concord River, which is based on a 1.6GHz Atom processor. But it made no mention of Via's Nano processor, formerly called Isaiah, which is set to arrive in laptops during the third quarter.

The Nano, which Via believes will outperform Intel's Atom, will further stoke competition with Intel. The new chip is not going to replace the C7, which Via will continue to offer. Instead, the Nano will give laptop makers another processor option when designing low-cost systems.

"We're in a very good place. This is our strongest position ever in the CPU market," said Richard Brown, vice president of marketing at Via.