News.com] (Photo by Jalal HB)

At a birthday party for chipmaker Intel held in Munich, Hannes Schwaderer, CEO of Intel Germany, confirmed that Apple will be using the company's new Atom processor in a future version of the iPhone. Iit won't be the iPhone that we've come to know and love, or the 3G model expected soon, but a new, larger version — possibly a rumored mini-tablet. Less pocketable than an iPhone, less useful than the MacBook Air. Let the Apple Newton jokes commence! Update: Intel has written in to say everyone's wrong! No larger iPhone with or with Intel Inside™.(Photo by Windell Oskay)

Struggling chipmaker AMD has added a new allegation to the company's antitrust complaint against rival chipmaker Intel. In a 108-page document filed in federal court, plaintiff AMD accused defendant Intel of paying manufacturers like Dell not to use AMD processors, citing internal emails and other documents which were turned over through the discovery process in the case. AMD has been struggling, having laid off thousands in the last few months. CEO Hector Ruiz, pictured here, is expected to make a major announcement today in Austin, Texas, possibly splitting up the company into separate chip-design and chip-fabrication businesses.

Clearwire, the wireless data company started by Seattle-area cell-phone billionaire Craig McCaw, will be recontsituted as a new company valued at $12 billion backed by primarily by Sprint, but also by cable providers Time Warner, Comcast and Bright House, chipmaker Intel and Web search behemoth Google. McCaw will continue as chairman of the board at Clearwire and Ben Wolff as CEO. Sprint CEO Dan Hesse agreed to give control to the pair as part of the deal, to ease concerns that Sprint's core wireless business would conflict as the new company's services began to compete for voice and data customers. Sprint has encountered numerous problems with deploying Intel-developed WiMax, and there's still the issue of whether the company will sell Nextel after a $35 billion acquisition in 2005 went south.

Is Hector Ruiz launching AMD into the business of making PCs? Not exactly. But after getting pummeled by Intel in 2007, the chipmaker wants to have more of a hand in designing them. It's no longer enough to sell chips, a field in which AMD excels technically; one must sell "chipsets" — entire ready-to-go packages of computing parts, including all the silicon a computer needs. Dell, HP, and others will actually manufacture AMD's new "Business Class" desktops and notebooks.

Apple updated its iMacs today with a new processor from Intel that's not supposed to be available for another 45 days yet. It's not the first time Intel gave Steve Jobs first dibs. A year ago, new iMacs came out with an Intel 3.0-GHz quad-core processor that HP and Dell had to wait on.

Steve Jobs likes to say that Apple is the last company that makes "the whole widget." But it doesn't, not really. Sure, Apple makes software and designs hardware — but inside its gadgets are silicon brains from the likes of Samsung and Intel. Jobs is adept at bullying chipmakers for lower prices and faster delivery, but he can't order around their engineers like he does his own employees. That must rile him. Jobs's ego, therefore, is the best explanation for Apple's $278 million acquisition of PA Semi, a microprocessor design startup. But is Apple getting into the ruthlessly competitive semiconductor business?

In an age when software rules, it's got to be tough to be stuck making hardware. Intel's Mash Maker is yet another "mashup" tool for connecting data from one website with tools on another, such as funneling addresses to Google Maps. Microsoft and Yahoo have similar products. Why is Intel, which makes chips, getting into such a profitless business? The "Intel Inside" advertising campaign convinced people to start asking what chip a PC runs on, but never persuaded them to care. A News.com reporter wangled this explanation from an Intel marketer:

Intel's profit contracted 12% to $1.44 billion in the first quarter as falling prices for flash memory and higher restructuring costs offset strength in its core microprocessor business. Revenue grew 9.3% to $9.67 billion. [AP]

"The next big thing in consumer gadgets will be the 'Internet in your pocket,'" according to Intel's announcement reported in the New York Times today. Where did I read that line nine years ago? Oh, right.

Despite big-name backers like Intel and Sprint investing billions of dollars, WiMax still isn't available in the U.S. Perhaps that's a good thing. According to an Australian company that has actually rolled out the technology, it doesn't work. Buzz Broadband says WiMax "may not work," the tech has "failed miserably" and is "mired in opportunistic hype." Last September, Intel executive Sean Maloney said of his company's investment in WiMax, "Now we have to prove it was worth it." Good luck, Sean.

Blaming lower prices for flash memory, Intel dropped its gross profit-margin forecast for its first quarter. One the news, Intel shares fell 3 percent in after hours trading yesterday. [WSJ]

2008 has not been kind to tech stocks, especially the Valley's leading lights.

Intel is reviving ClearWire andSprint's failed WiMax partnership with a much-needed $2 billion investment. Intel has always been WiMax's biggest proponent, spending a ton of money on development and including the technology in its next laptop chip design. This is on top of the $5 billion that Sprint has promised to invest in WiMax over the next three years. [Gizmodo]

Nvidia should think about buying chipmaker AMD to "rearchitect it," according to American Technology Research analyst Doug Freedman. Translation: Kick out management, change its technology direction, and end AMD's perpetual Perils of Pauline drama. Both AMD and Intel have plans to integrate graphics functions into their microprocessors, rendering Nvidia's graphics cards superfluous. Nvidia CEO Jen-Hsun Huang would be a good candidate to turn around AMD's fortunes, and "buying AMD propels nVidia into a formidable competitor for Intel," says Freedman.

High-end graphics card maker Nvidia is making an ad push to make the brand as recognizable as Intel, which has spend millions on its "Intel Inside" ad campaign. Nvidia controls more than two-thirds of the market for desktop graphics cards but is facing competition from Intel and AMD, which bought graphics chipmaker ATI last year. Must be exciting for Nvidia marketing exec Dan Vivoli, who finally gets to spend some money after 10 years at the company: The ad campaign could cost as much as $30 million-$40 million, compared to a $353,000 spend in the first 9 months of 2007.

The European Commission raided Intel's Munich offices and several computer resellers in Germany today. Officials are investigating claims that Intel gives hardware manufacturers cash, rebates and discounts to use its chips instead of rival AMD's. [WSJ]

Sprint Nextel has revived serious discussions with startup Clearwire to form a joint venture that would bring in funding from the likes of Intel, Google and Best Buy to build a high-speed wireless network using WiMax technology. [WSJ]

BusinessWeek's Spencer Ante has another interview outtake with former Hewlett-Packard board member and Kleiner Perkins cofounder Tom Perkins. In it, Perkins explains how he helped turn around HP. Here's the 100-word version of the harrowing tale of board committees, patent policies and microprocessors oh my!

Intel's net income rose 51 percent to $10.7 billion in the last quarter. But that's not good enough for investors, who dropped the company's share price by more than 10 percent in after hours trading. [WSJ]