Intel, the world’s largest chip maker, is at a crossroads. The company, with Microsoft, dominated the client-server era of computing. Its chips power most servers and PCs sold today.

But the action in the computing industry is no longer in desktops and laptops, but rather in smartphones and tablets, where it’s another company, Britain’s ARM, which has come to dominate thanks to its powerful but battery-sipping designs, which it licenses to third-party manufacturers.

Data from various research houses in recent months show that the traditional PC market is in trouble. Data from Gartner, for instance, showed that 79,2m PCs were shipped in the first quarter of 2013, an 11,2% decline over the same quarter in 2012 — the first time the number had fallen below 80m since the second quarter of 2009.

Tablet and smartphone manufacturers have shunned Intel chips in favour of less power-hungry ARM designs, which power everything from the iPhone and iPad to the smartphones made by HTC, Nokia and Samsung Electronics.

The move has hurt Intel, whose margins are under pressure and whose share price has made no real headway for more than a decade. It’s trading at just a third of what it was at the peak of the stock market bubble in 2000.

But Intel is convinced it has the right strategy to grow meaningfully in mobile computing, even it means a protracted war with ARM.

“We’ve made good progress in the past 24 months,” says Intel global director Carlos Martinez in an interview with TechCentral. “It’s a long-run strategy, not a 100m race.”

Key to Intel’s strategy is a new Atom processor built using a 22nm manufacturing technology. Codenamed Silvermont, the new processors promise significant improvements in both performance and power efficiency over previous Atom designs.

The 22nm — or nanometre — manufacturing process refers to the minimum dimensions of transistor technology. A nanometre, Intel explains, is one billionth of a metre, or the size of one ninety-thousandth of the width of an average human hair.

The first Silvermont Atom processors will have four processing cores and will be targeted at tablet users; two-core chipsets are planned for later this year for smartphones.

The company says its recent advances in chip design — including moving to 22nm manufacturing and to three-dimensional transistors — mean that Moore’s Law remains firmly in place. The law, penned by Intel co-founder Gordon Moore in 1965, stated that the number of transistors on integrated circuits would double roughly every two years. He predicted at the time that the trend would continue for at least another 10 years. Nearly 50 years later, the law still holds true.

Intel expects to move to even smaller, 14nm technology in 2015. The company is building a US$5bn fabrication plant in Arizona in the US to make the next-generation chips.

“Transistor size and structure are at the centre of delivering the benefits of Moore’s Law to the end user,” Intel says. “The smaller and more power efficient the transistor, the better.”

Martinez says Intel-powered mobile devices have a key advantage over other processor designs: they are compatible with other Intel chips, meaning they can run the same software. “It’s Intel architecture, so it’s the same as you find in a PC or in a laptop.”

Slowly but surely, Intel is convincing smartphone manufacturers to take a bet on its technology. For now, the company has partnerships in place with traditional PC vendors that are moving into the mobile space — companies such as Acer, Asus and Lenovo. But Martinez says Intel has a “pipeline of partners” it is working with. Handset maker Motorola, a subsidiary of Google, is also a partner, he says.

It’s also keen to form partnerships with mobile operators and other service providers. The company has launched Intel-powered smartphones in Kenya, through Safaricom, and recently inked a deal with Etisalat in Egypt to do the same. “We have also launched with operators in China, India and Brazil, as well as eight countries in Latin America.”