Intel has announced at the Developer Forum on Tuesday, August 16, that one of its factories will start producing ARM chips to be used in smartphones.

According to The Verge, Intel will produce the new chips based on designs by the UK-based firm ARM Holdings. Intel has announced the news on a company blog. According to the blog post, the Santa Clara company has entered into a new licensing agreement with its competitor ARM in order to produce the ARM-based chips. The new licensing agreements also include deals t produce chips for Spreadrum, Netronome and LG Electronics.

The deal is a strategic move from Intel to offer its large-scale custom chip manufacturing facilities to third-parties. Intel's production facilities include 10-nanometer manufacturing lines.

Will Abbey, a general manager in ARM's physical design group, declared at IDF that in his opinion the new licensing agreement with Intel can make a real difference in the chip manufacturing industry. Intel will produce ARM's 64-bit cores used by companies such as Nvidia, Qualcomm and Apple. The majority of the world's mobile phones are powered today by ARM-based chips.

This deal comes after Intel has closed its mobile Atom projects codenamed SoFIA and Broxton. The Santa Clara-based company ceded ground to Taiwan Semiconductor Manufacturing Co., Samsung and other chip makers that have now a dominant position on the chip market smartphones.

A few years back, there were rumors that Intel was preparing a deal with Apple to manufacture chips of the iPad and iPhone.  According to Fortune, with the new ARM deal in place, Intel now has the licensing framework to enter the iPhone chip business.  

Apple is reportedly already turning to Intel for the modem chip to be installed in some of its upcoming iPhone models. Apple could likely be a customer for Intel's ARM chips in the future, according to some analysts. For now, Apple is using modified ARM plans to design its iPhone chips, but it outsources the manufacturing process.