February 7, 2000 Web posted at: 10:05 a.m. EST (1505 GMT) by Terho Uimonen

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(IDG) -- L.M. Ericsson Telephone and Intel announced Friday an agreement under which the two companies will join forces on defining next-generation flash memory devices for use in Internet-enabled mobile phones.

The agreement also includes a three-year commitment by Ericsson to purchase Intel's flash memory devices for use in its mobile phone handsets, the companies said in a statement.

The value of the multi-year purchasing agreement is at least $1 billion, said Jan Ahrenbring, vice president of marketing and communications at Ericsson Mobile Communications, in a telephone interview.

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Ericsson, the world's third-largest supplier of mobile phone handsets, and chip giant Intel will work together to define flash memory products for use in Internet-enabled handsets to make them capable of storing data such as Web pages, e-mail, voice and music, the companies said in the statement.

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"Generally speaking, the trend in mobile phone handsets is toward more memory as well as more processing power," Ahrenbring said.

The agreement announced last week, however, is limited to flash memory devices, and Ericsson currently has no plans to use Intel's StrongArm microprocessors in its handsets, he added.

Ericsson hopes the deal will help it to bring to market new handheld devices that combine voice and Internet capabilities for the forthcoming third-generation (3G) mobile networks, it said in the statement.

In related news, Ericsson held live demonstrations of a prototype version of a next-generation GPRS (general packet radio service) handset at the GSM World Congress, held last week in Cannes, France.

Ericsson's first commercial versions of GPRS handsets are scheduled to ship in volume by next year's first quarter, the company said in a statement.

Bridging the gap between the upcoming 3G and current second-generation mobile networks based on the GSM (Global Systems for Mobile Communications) and TDMA (time division multiple access) standards, GPRS networks will offer data transfer rates up to 115K-bps. Most current GSM networks only offer data communications at 9.6K-bps.

Intel, meanwhile, earlier last week said it had signed a letter of intent with Rockwell International to acquire a chip-making facility in Colorado, where the chip giant expects to begin manufacturing flash memory chips by year's end.