AMD has set up a business arm to develop graphics technologies that can be licensed to other semiconductor manufacturers across the handheld industry.
The chip firm said that the move followed a growing demand for visually compelling content on handheld devices, which requires rich graphics and 3D hardware acceleration.
The AMD intellectual property licensing initiative brings together the company's engineering skills, graphics technology and application developer and publisher support.
"As part of AMD's aim to provide an advanced visual experience across all devices, new handheld devices developed with AMD graphics technology inside will contain stunning user interfaces, immersive 3D games and dynamic multimedia content," a spokeswoman told vnunet.com.
AMD predicted that the market for handheld devices would reach more than a billion units worldwide in 2007.
"AMD has been developing graphics technology for PCs and video game consoles for more than 20 years, and has shipped more than 200 million processors for mobile phones," said Paul Dal Santo, vice president and general manager of AMD's handheld division.
"This uniquely qualifies AMD to work with OEMs and other semiconductor suppliers to bring handheld devices to market."
ST Microelectronics has already licensed AMD graphics technology, including 2D, 3D and vector graphics core engines, as well as related software compliant with the OpenGL ES 2.0 and OpenVG 1.0 standards.
"Our extensive benchmarking research found that AMD delivers the highest quality graphics technology for handheld user interfaces and sophisticated applications such as GPS," said Jyrki Hannikainen, general manager of ST Microelectronics' application processor division.