France Telecom's mobile unit Orange will launch a smartphone in France and the United Kingdom this summer designed by Intel and using its newest processor.

While the handset will be branded by Orange, its back cover will also boast the Intel swirl that consumers have come to expect to see on PCs over the past two decades.

That's a major milestone for Intel, whose chips are the brains in 80 percent of the world's laptops and desktop computers but power virtually no smartphones or tablets to date.

With PC sales flagging in the United States and Europe, nearly all smartphones and tablets, including Apple Inc's iPhones and iPads, use energy-efficient processors based on technology licensed to chip designers by Britain's ARM Holdings and made by Intel rivals like Samsung Electronics and Qualcomm Inc.

The new smartphone will run Google's Android platform and be among others that Orange sells under its own brand.

Aimed at Orange's entry level, pay-as-you-go clients, the phone is a copy of a reference handset Intel created to showcase its newest mobile chip to potential customers, with features like high-definition video and an 8-megapixel camera.

"This is a really big deal for us," Mike Bell, who co-heads Intel's mobile and wireless business and who is responsible for creating the reference phone, told Reuters. "It's phenomenal that Orange has asked us to participate and put our Intel logo on the back."

Orange has hired Taiwanese hardware company Gigabyte to manufacture the phones and is adding its own flavor by installing additional proprietary software.

With Wall Street concerned Intel is being left behind in the mobile market, the Santa Clara, California chipmaker has been pouring resources into improving its offerings for smartphones and tablets. Previous attempts fell flat but Intel says its newest mobile processor, codenamed Medfield, stands up to rivals' chips in power efficiency and performance.

At the Consumer Electronics Show in Las Vegas last month, Intel impressed technophiles with demonstrations of its reference smartphone and said Motorola Mobility and Lenovo have picked Medfield for upcoming handsets.

Intel launched its "Intel Inside" brand campaign in 1991, and its success at making customers loyal to a particular component in PCs, known as ingredient branding, defied many expectations at the time and has since become a case study.

(Reporting By Noel Randewich; Editing by Richard Chang)

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