Intel has reportedly designed a handset that may be manufactured by ZTE, based in Shenzhen, China, the eighth-largest phone manufacturer in the world. The chip giant has supplied a design for the phone, based on a version of its Atom microprocessor, that may go on sale in China, according to two people with knowledge of the plan cited by BusinessWeek.

There are no phones currently on sale that use Intel processors. The company may be king of chips in the PC world, but it has yet to enter the mobile phone market. The chipmaker is thus supposedly seeking partners to help it break into the smartphone industry, so as to lessen its reliance on personal computers.

ARM Holdings is currently the company to beat, as it designs processors that dominate the mobile and embedded electronics market. Qualcomm, Texas Instruments, and Samsung Electronics, which rely on ARM designs, are the biggest makers of phone chips.

Intel's efforts suffered a serious blow two months ago, when Nokia announced it was switching to Microsoft's Windows Phone as its primary operating system (the announcement made Intel's CEO curse). As a result, Symbian is being phased out and MeeGo, created in partnership between Nokia and Intel, is becoming an open-source mobile OS project with increased emphasis on longer-term market exploration of next-generation devices, platforms, and user experiences. In other words, Nokia decided MeeGo would simply be a research project, and Intel lost a huge partner in the mobile world (at least for phones, MeeGo will still be used on tablets).

Intel wouldn't confirm or deny the ZTE rumor, but it did emphasize its interest in the mobile space. "In terms of the overall market, we recognize that we have some work to do, but we're patient and we're committed to the business," an Intel spokesperson said in a statement. "We have the right elements to be successful. We are working on a number of engagements, but are not ready to talk about them." ZTE meanwhile confirmed that its handset division has held talks with Intel, but did not offer any further information.