A tug of war has started between world’s largest chip maker Intel and ARM on who best will be patronised in the chip installation business for Android-based tablets, as Intel showed off with one of the first low-cost Android tablets with an Intel x86 processor at the Mobile World Congress, thereby putting ARM, whose processors go into most tablets today on the run.

As if that was not enough, Asustek released a 7-inch tablet running a single-core Intel Atom Z2420 processor code-named Lexington, which is targeted at low-cost smartphones and tablets.

 Priced at $249, the tablet has 3G voice and data capabilities, and Asus claims it offers nine hours of battery life. The tablet includes multiple cameras and a 1280 x 800 pixel screen.

That tablet is comparable on price and features to low-cost 7-inch Android tablets with ARM processors. Hewlett-Packard recently introduced the Slate 7 with a dual-core ARM processor, which starts at $169 and offers 6 hours of battery life but does not have 3G capabilities.

Google’s Nexus 7 tablet starts at $199 with a quad-core ARM processor, but the price goes up with the addition of mobile broadband features.

Intel is just getting started in the low-cost Android tablet market. The company has so far offered the Atom Z2760 processor, code-named Clover Trail, only for Windows 8 tablets. Wanting to leave Clover Trail largely to Windows, Intel last year decided to develop Lexington, which is a variant of Intel’s Atom chip code-named Medfield.

Lexington chips are already found in low-cost smartphones like Kenya phone maker Safaricom’s Yolo, which is priced at about $125.

More Lexington-based smartphones are expected from companies like Lava International and Acer in developing countries.

Hermann Eul, the vice president and general manager of Intel’s Mobile Communications Group during an interview at MWC, in Barcelona said the low-cost Android device market is important for Intel, and more low-cost Lexington tablets and smartphones will be released going forward.

“The tablet market is important for us,” Eul said. “We will see all kinds of sizes.”

To gain an edge, Intel is also taking advantage of communications technology it acquired from Infineon, as exemplified by the Fonepad. There’s a big need for such devices, and Eul said that the company will focus on increasing its presence in the market by providing the chips required by device makers.

While Lexington for smartphones and tablets are viewed as for Android only, things will change toward the end of the year when Intel releases its latest tablet Atom chips, code-named Bay Trail, which are the successor to the Windows-only Clover Trail.

 Eul said tablets with Bay Trail will be released simultaneously with Android and Windows.

That will effectively break up segmentations of Intel’s tablet chips based on OSes.

“Last year’s priority was Windows to catch the Windows 8 availability. Now we are pulling in all the Android tablets as well,” Eul said.

The Bay Trail chips will be based on an entirely new microarchitecture and are designed to be faster and more power efficient than their predecessors, according to Intel. The chip will be made on the 22-nanometer manufacturing process, and the 3D transistors will partly improve power and performance on the chips. Intel currently makes laptop and desktop chips code-named Ivy Bridge using the 22-nm process.

Eul could not say how Bay Trail tablets would be priced, and that device makers would define that. But the tablet markets develop very fast, and a year can change the scene, Eul said, adding that a range of form factors and OSes are redefining the space.

“How could we dare make a bet on what is going to be a winner two years from now? What is important is if you take the right steps, whatever pans out, we will still be in the game,” Eul said.