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Hannes Schwaderer, managing director for Intel Germany, said in an interview that the new smartphone would also be larger than the current models, to accommodate a bigger display.

Schwaderer also claimed that the Atom-powered model will be one of two that Apple will unveil at its Worldwide Developers Conference in June. The second will be similar to the current handset, but with 3G, he said.

Atom is a new low-power chip designed specifically for mobile devices, though the current generation of the chip isn't thought to be suitably power efficient for a device such as the iPhone, which uses chips based on the ARM architecture.

Intel is currently targeting larger mobile devices, though it's expected to go after the smartphone market with the second generation Atom expected in 2010.

There was some speculation that Apple may be designing its own processor for the iPhone, after it bought PA Semiconductor last month. However, Apple refuted these suggestions claiming it was only interested in PA Semi's technology and engineers.