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Qualcomm

(QCOM) - Get Qualcomm Inc Report

shares got whacked Thursday after chip giant

Intel

(INTC) - Get Intel Corporation Report

announced plans to release a new wireless chip designed for next-generation cell phones.

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Shares of Qualcomm closed the day down 7.3% at $33.91, even though the two companies design and build chips for different wireless technologies. Intel shares ended up 2.5% at $15.53.

Intel's new wireless chip, the PXA800F, will be designed for future smartphones, which enable users to make calls as well as play games and send and receive email. Intel's chips are designed for wireless phones using the global system for mobile communications, or GSM.

By contrast, Qualcomm's cell-phone chips and components are all geared toward its code division multiple access, or CDMA, standard. Currently, about 13% of the world's 1.1 billion wireless subscribers use a CDMA phone.

Several Wall Street analysts rushed to Qualcomm's defense. "With respect to Intel, we believe concerns may be overdone following the company's announcement that it will be introducing a DSP to the GSM community," said Lehman Brothers telecom gear analyst Tim Luke in a client note. "We note QCOM does not currently compete in the GSM chipset market and recognize that Intel has been attempting to increase its profile in the wireless chipset market for several years with only limited success."

A.G. Edwards analyst Gregory Teets said, "Intel's new chipset is not a threat to Qualcomm's volumes." He added, "

Intel's chipset competes with GSM offerings from Texas Instruments, ST Micro and Agere, not Qualcomm's CDMA2000 and WCDMA. Should Intel begin to sell CDMA chipsets, it would need to negotiate a license with Qualcomm and pay royalties on the chipset." Companies that design CDMA chips are required to pay Qualcomm a royalty based on a percentage of sales.

Intel spokesman Mark Miller said the company has no current plans to enter the CDMA market. He said Intel's wireless chip "is a highly integrated processor designed specifically for the GSM/GPRS market. If we were to introduce a processor for the CDMA market, it would require a whole new processor. The logic module and software that help speak GSM/GPRS is integrated into the chip. It's not a thing where we can swap out a chip to make it CDMA ready."