Apple's iPhone will run on Intel's Atom processor by 2010, according to an analyst with US investment firm FTN Midwest Securities.

The low-power Atom chip has only just started finding its way into mini-laptops such as Asus's Eee PC 901, but that hasn't stopped speculation that the processor is destined for even smaller devices in the near future.

In May, it was claimed that Apple was working on a portable device slightly larger than the iPhone that would include the Atom, but the speculation suggested the product would be announced at Apple’s Worldwide Developers Conference earlier this month. As that product didn't materialise, rumours of an Atom-based Apple product had gone quiet, until now.

FTN analyst Joanne Feeney said the Atom-based iPhone is likely to become available in 2009/2010 – about the time Intel is expected to release the next generation of the processor, codenamed Moorestown. Moorestown, based on a 32-nanometre production process, will be cheaper and more power-efficient than the original Atom, according to Feeney, making it ideal for the third-generation iPhone.

Apple has so far refused to comment on the rumours.

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