Wealthy Mexican nationals make their home in Sonterrey

Propelled north by cartel violence, wealthy Mexican immigrants have regrouped in gated developments in several Texas cities, where their growing influence has been compared to the impact of well-heeled Cuban refugees arriving in Miami decades ago. Nowhere is the evidence more striking than in San Antonio, Texas' second-largest city and a short private jet hop from Monterrey, where many of the new immigrants built their wealth.

Wealthy, business-savvy Mexican immigrants transform Texas city

SAN ANTONIO — The Mexican businessmen in Rolexes and Burberry ties meet on the north side of town, at Cielito Lindo Restaurant, or at new neighboring country clubs. Their wives frequent Neiman Marcus, Tiffany's and Brooks Brothers at the nearby mall. Their children park Porsches with Mexican license plates in the student lots at Reagan High School.

They are part of a wave of legal Mexican immigrants who have been overlooked in the national debate over how to deal with their largely impoverished illegal compatriots. Propelled north by drug cartel violence, they paid thousands of dollars to hire attorneys and obtain investors' visas for themselves and their families (including maids). They have regrouped in gated developments in several Texas cities, where their growing influence has been compared to the impact of well-heeled Cuban refugees who arrived in Miami decades ago.

Nowhere is the evidence more striking than in San Antonio, Texas' second-largest city and a short private-jet hop from Monterrey, Mexico, where many of the new immigrants built their wealth. They have poured into developments with names like the Dominion, Stone Oak and Sonterra that were cut into the rocky hills and oak groves north of the Loop 1604 highway that rings the city.

More than 50,000 Mexican nationals now live permanently in San Antonio, city officials say, turning an upscale enclave known as "Sonterrey" or "Little Monterrey" into the city's second-fastest growing ZIP code.

Real estate agent Ana Sarabia caters to the new arrivals — finding them immigration lawyers, new schools, banks and office space — and sees them reshaping her hometown.

"I can see it transitioning," said Sarabia, 45, who lived for a time in Mexico City. "This has always been a bicultural city. Parts of it have now become a new Mexico."

There's Lorena Canales, 40, who moved from Monterrey with her two youngest children two and a half years ago to start a bilingual day care after witnessing a gun battle outside her local Wal-Mart.

Uriel Arnaiz, 40, relocated with his wife and 3-year-old son from Mexico City four years ago to open a high-end tequila import business after some of his son's friends were kidnapped.

José Ramos, 55, moved two years ago from Monterrey to open a restaurant, Vida Mia, after a relative was kidnapped and killed.

It's not clear whether new immigration policies being contemplated in Washington would affect this group of wealthy immigrants, who skip long immigration lines by hiring attorneys in Mexico to apply for business-related visas at U.S. consulates.

Most had to prove they were either employed by a multinational company or had a valid business plan and enough money to start their own. Some had to show American investments worth hundreds of thousands of dollars. Many moved in a matter of weeks, though some said the process had become more difficult in recent years, with tougher screening by U.S. consulates.

Costs vary depending on the type of visa. In many cases, it is cheaper than what a smuggler would charge for an illegal crossing. Attorney fees can range from $1,500 to $6,500, compared with coyote payments of $6,000 or more.

Arnaiz's initial visa allowed him to stay in the U.S. for up to a year. He was able to renew the visa, which is required every two years for up to seven years if he wants to stay. His wife and son were eligible for visas for the same time period (children under age 21 are eligible). While staying in the U.S. on those visas, they were allowed to pursue permanent residency, or green cards, which they got in recent months.

"There's a lot of requirements," Arnaiz said. "You need to have a real, sustainable project."

The visa for professions listed in the North American Free Trade Agreement is relatively quick and cheap to obtain, some said, with attorney fees ranging from $1,500 to $3,000.

During the last decade, the number of such visas issued to Mexicans annually skyrocketed from 686 to 7,601, according to the State Department.

The newcomers — nicknamed "migrantes fresas," or rich migrants — are conspicuous even in this largely Latino city. Sociologists compare the "Mexodus" of professionals to the wave of exiles who fled to Texas after the Mexican Revolution in 1910, or wealthy Cubans who decamped to South Florida after the revolution in 1959.

Former San Antonio Mayor and Secretary of Housing and Urban Development Henry Cisneros, whose grandfather was exiled to San Antonio during the Mexican Revolution, calls them a "new diaspora with the potential to rival the impact Cubans had on Miami."

Harriett Romo, a sociology professor and director of the Mexico Center at the University of Texas at San Antonio, has been studying a dozen Mexican families who immigrated through investor visas.

"What we're seeing is that they move into kind of a new Mexican enclave — it's not a barrio like you would see on the east side of L.A. or west side of San Antonio. It's an upscale Mexican neighborhood with parties at the country club," she said.

Romo found that the new residents don't mix much with lower-income Mexican immigrants or with Mexican Americans, the Tejanos who helped build San Antonio. They are focused instead on "changing the image of the immigrant," she said. "They see themselves as having a very different experience because they come with official visas and more resources."

Writer Sandra Cisneros, a Chicago native who has lived in San Antonio for almost 30 years, says the flow of wealthy immigrants "constantly refreshing the ties" to Mexico has changed the character of the city, which long had the feel of a small town and now has a population of about 1.4 million.

San Antonio Mayor Julian Castro, a Mexican American and a rising star in the Democratic Party who has traveled south of the border to recruit businesses, says he hopes the newcomers stay.

"My hope is that they are planting firm roots and will become American citizens and fully participate in the community," he said.

The number of international passengers traveling to San Antonio International Airport increased 132% last year from the year before, and the airport added two new carriers to Mexico.

Flight schools are struggling to meet the demand for pilots to fly Mexicans whose private jets fill the runways of southern Texas.

Pepe Hurtado says many of the clients at his San Antonio luxury car business store their cars in hangars at the airport when they jet back to Mexico.

Cars with plates from the Mexican states of Nuevo Leon and Coahuila also fill the parking lots of the north side's Life Time Fitness, Holy Trinity Catholic Church and HEB grocery.

"You can definitely see it and feel it. There are times I go to HEB and I only hear Spanish," said Sylvia Orduna, 33, who works at a high-end cosmetics company that has seen steady business from new Mexican residents.

Pamela Gardner, 61, has lived at the Sonterra housing development for a decade and has noticed many new Mexican neighbors in the last few years.

"It does put a strain on the schools," Gardner said, noting that some schools have been "capped," turning away new students. She said her daughter, a vice principal at a local school, had to add classes in English as a second language because so many students speak only Spanish.

"You feel bad for the husbands because they're down there during the week and they come on the weekends and have to go back. It's sad," she said of those who commute to work in Mexico.

Newcomers settle in Sonterrey because they hear from friends that the local public schools are highly rated, they have business connections in the area and see billboards in Mexico advertising the gated communities. Some have difficulty adjusting, particularly wives and children accustomed to cooks and chauffeurs.

"We are used to being served and surrounded by help," said Arnaiz, whose wife traded two live-in maids for a Mexican American housekeeper who comes twice a week.

"That's why you see a lot of Mexican nationals here with their maids," he said. "Being here without domestic help, the inside dynamic of the family is different."

Canales, the mother from Monterrey, says her children had to adjust to life without a maid and their father during the week. But she says the trade-off is they can bicycle and hear other kids playing outside — a joyful noise they had not heard for years in Monterrey, where they lived behind high walls and barred windows.

"We had neighbors whose children were kidnapped and never came back," she said.

But in Sonterrey, as in Mexico, gates don't guarantee protection from the cartels.

Last year, one of Arnaiz's neighbors, fellow newcomer Fernando Alejandro Cano Martinez, was charged with laundering money for the Gulf cartel. Two brothers from Guadalajara were charged with using north side homes and businesses as a front for cartel money, which financed their Learjet, an Italian restaurant and other investments.

"We're seeing 'Miami Vice'-type money laundering — shipments of currency and wire transfers from international organizations," said Michael Lemoine, a special agent with the Internal Revenue Service in San Antonio.

It's not clear how permanent the new enclave and its problems are. Many residents are watching to see if the newly elected Mexican president can curb cartel violence enough for them to feel safe moving back to Mexico.

Ramos, the restaurant owner, is among those who have debated returning to Mexico. His daughter Mayela at first struggled with the transition. But when he decided to stay, she agreed.

"All my friends ask me, 'When are you coming back?'" Mayela Ramos, 26, said during the lunchtime rush at the restaurant, as Mexican ladies with designer handbags nibbled fideo, a Mexican pasta, and chatted in Spanish. "But our life is here now."

TEXAS BOASTS 3 OF THE NATION’S CITIES WITH THE BEST JOB GROWTH

Job growth is slowly on the rise according to analysts. Recently the annual list of “Best Cities for Jobs” was release with some surprising results. Last year the reports showed a gloomy outlook when only 13 of 397 metropolitan areas experienced any growth. For this year's list, which measured job growth in the period between January 2010 and January 2011, most of the best-performing areas experienced increases in employment increases.
Almost 400 metropolitan statistical areas are ranked based on employment data from the Bureau of Labor Statistics reported from November 1999 to January 2011. Rankings are based on recent growth trends, mid-term growth and long-term growth and momentum. The locations are also broke down by size, small, medium and large, because regional economies differ markedly due to their scale.
Reflecting the importance of the war effort in stimulating local economies, command of this year's best place for jobs was handed to the Army from the Marines. Killeen-Temple-Fort Hood, Texas, shot up to #1 from #4, while the military-based Jacksonville, N.C., last year's first-place winner dropped to 19th place.
Once again the best places for jobs tended to be smaller communities where small improvements can have a relatively large impact. Eighteen of the top 20 cities were either small (under 150,000 nonfarm jobs) or mid-sized areas (less than 450,000 jobs).
Texas, however, dominated the three size categories, with the #1 mid-sized city, El Paso (#3 overall, up 22 places from last year) and #1 large metropolitan area Austin (#6 overall), joining Killeen-Temple-Fort Hood (the #1 small city) atop their respective lists.
Texas also produced three other of the top 10 smallest regions, including energy-dominated #4 Midland, which gained 41 places overall, and #10 Odessa, whose economy jumped a remarkable 57 places. It also added two other mid-size cities to the list with #2 Corpus Christi and #4 McAllen-Edinburgh-Mission. With all this moving there has also been an increase in Truck Bed Liners.
California experience a miserable year with having zero regions in the top 150. This led to a group of California officials to Texas to learn possible lessons about what drives job creation. Gov. Jerry Brown and others in California's hierarchy have a lot to learn as, the fact is, that the city Brown formerly ran, Oakland, ranked absolute last (#65), among the big metros in the report. This is two places behind perennial also-ran #63 Detroit-Livonia-Dearborn, Mich.
One lesson that green-centric California may have trouble learning is that, however attractive the long-term promise of alternative energy, fossil fuels pay the bills and create strong economies, at least for now. Even outside of Texas, oil capitals did well across the board, not surprising given the surging price of gas. The #2 small metro, Bismarck, N.D., which also is #2 overall, is the emerging capital of the expanding Dakota energy belt. Also faring well are Alaska's two oil-fire cities, Fairbanks (#10 on the small list) and Anchorage (#3 on the medium-sized list).
There were some great improvements as well. Most welcome are signs of revival from New Orleans-Metarie, La., which moved up a stunning 46 places to capture the #2 slot among large metros. The region lost 11% of its population and nearly 16% of its jobs during the last decade. But now the Big Easy seems to be finding its place again among America's great cities. Jobs, up 3.5% since 2006, have been created by rebuilding, a resurgence of tourism and a growing immigrant population. This region’s Hispanic population grew by 35,000 over the past decade.
There were other inspirational improvements this year. Sparked by a revival in manufacturing, a host of former gloomy areas in parts of the Midwest are showing signs of definite improvement. Niles-Benton Harbor, Mich., a long-time sleeper at the bottom of the list, shot up a remarkable 242 places this year to a respectable #121. Another old industrial city, Kokomo, Ind., ascended 177 places to #215, while Holland-Grand Haven, Mich., improved by 172 places to #221 and Grand Rapids, Mich., rose 167 places to #183. Milwaukee, a long-time loser among the largest metros, moved up by a healthy 163 places overall to a better-than-average #143.
The Northeast Corridor has also made strong progress. The stimulus has been particularly good for the vibrant economies surrounding the ever-expanding federal leviathan. Among the large metros, Washington-Arlington-Alexandria, Va., did best of all the cities outside the South, repeating its #6 ranking among large metro areas. Right behind, at #7 on the large city list, sits the primarily suburban Northern Virginia metro area, while Bethesda-Rockville-Frederick, Md., ranks 12th.
The other big East Coast winners are the financial and university-oriented economies, which have reaped huge benefits from the TARP bailout and the Obama administration's college-centric stimulus plan. After the Texas cities and the imperial center, most of the best performing big metros are located in financial and university centers, including #9 New York City, #10 Philadelphia, #11 Pittsburgh, #13 Boston and #15 Raleigh-Cary, N.C, which is good news for Raleigh Real Estate.
Outside of Oakland and the big Southern California metros the biggest losers including #60 Los Angeles, #59 Sacramento, #58 Riverside-San Bernardino and #50 Santa Ana-Anaheim-Irvine. The bottom tier consisted of a motley crew of mid-South cities like Memphis (#64 on the big city list) and still-struggling, former big Sunbelt boomtowns Las Vegas (#62), West Palm Beach-Boynton Beach-Boca Raton, Fla. (#56), Ft. Lauderdale-Pompano Beach-Boynton Beach, Fla. (#54), Phoenix-Mesa-Glendale, Ariz. (#53), Atlanta-Sandy Springs-Marietta, Ga. (#52) and Tampa-St. Petersburg-Clearwater, Fla. (#51) which are leaving people asking who can Ship My Car?
For the most part, these areas rose with the housing bubble and will not fully recover until the economy diversifies beyond real estate speculation. Already some of the bubble victims are showing signs of life, including #155 Merced, Calif., up 134 places, and #167 Orlando, Fla., which rode a revived interest in tourism to jump 89 places since last year.
While energy, America's three wars, the recovering financial markets and real estate problems have played the lead role in setting the stage for the best places to do business, the Intermountain West has shown resilience with Salt Lake City, at #20 among large cities; Provo-Orem, Utah, Ogden-Clearfield, Utah, and Boulder, Colo., at Nos. 10, 25 and 26, respectively, among mid-sized cities; and Logan, Utah, and Fort Collins, Colo., at Nos. 9 and 38 among small cities.
The weak economy continues to reek havoc on new jobs, however, small increases are a good sign. California, Florida, and Nevada have had a bleak year, but improvement can still be noted. Hope is given to all with a city like New Orleans making huge strides. The next surge is expected to be in old industrial areas with newer infrastructure and appealing climates.

Dallas-Fort Worth Home Sales drop 30 Percent in October

Star-Telegram

Existing home sales in North Texas plummeted 30 percent in October, a drop that market economists expected.

In the 29-county North Texas region, 4,413 homes were sold last month, according to the latest report from Texas A&M University's Real Estate Center.

It was the fifth straight month of declines compared with figures from a year earlier. Sales for the first 10 months were down 5 percent, the report said.

Only two Tarrant County submarkets saw increases in sales in October, and two remained unchanged.

The central west area of Fort Worth saw sales climb 24 percent from a year earlier, and Colleyville had a 19 percent increase. Sales in Kennedale and Southlake were the same as last year.

The largest decline in sales, 60 percent, was in northeast Arlington.

Sales of condos and townhomes in downtown Fort Worth were up 500 percent, with six sales. In the third quarter, buyers were paying 96 percent of the listing price on downtown condos and townhomes, according to a Downtown Fort Worth Inc. residential report.

Economists had expected the numbers to be way down in October and again in November, because home sales spiked this time last year when the first round of first-time home buyer federal tax credits were issued. Sales of homes bought using a tax credit needed to be closed by Sept. 30.

The median sales price in October was $146,000, a 3 percent increase from a year ago. The median sales price for this year is $147,000, a 1 percent increase.

Dallas Area ranks 12th in Commercial Real Estate Forecast

Dallas Morning News

 

Dallas-Fort Worth gets middling marks in the latest commercial real estate market forecast.

The closely watched "Emerging Trends in Real Estate" report usually favors coastal and Northeastern markets, and this year is no exception.

Washington, D.C., New York, Boston , San Francisco and San Jose, Calif., were on the top 10 list of U.S. markets to watch for commercial property investment opportunities.

Some Texas cities also did well. Austin ranked fourth, and Houston was eighth in the annual list.

Although D-FW significantly outpaces other Texas cities and most U.S. markets in economic growth, the area was rated 12th out of more than 50 U.S. markets in the 2011 forecast

The D-FW area got an even lower rating for development prospects in the year ahead.

The survey showed that industry executives across the country are optimistic that 2011 with be a turnaround year.

"Investors with cash could have excellent opportunities to seize market bottom plays by recapitalizing cash-starved owners or buying foreclosed assets," said Stephen Blank, a senior fellow with the Urban Land Institute, which sponsored the study with accounting firm PricewaterhouseCoopers.

The report gives D-FW high marks for stable housing prices and low business costs.

But North Texas was slammed for its persistently high office vacancy rates and the ease of building new projects here.

The D-FW area was second only to Los Angeles as one of the best places to buy industrial properties.

Foreclosure Halt may only Delay the Inevitable

Houston Chronicle

A possible moratorium on foreclosures may help some distressed borrowers, but for the overall housing market, it will just delay the loss of homes for some Texans, real estate experts say.

Texas Attorney General Greg Abbott asked 30 lenders this week to put foreclosures and sales of foreclosured properties on hold and to review the way they document repossessed properties.

The request came after lenders halted some foreclosures in 23 other states amid allegations of "robosigning" — processing documents without proper review and notarization. The federal government is now looking into the allegations.

"The AG demand, especially if he sues in court, will only cause a substantial delay in getting this default backlog cleared out, therefore extending the high volume on into 2011," said Amanda LeCureux, managing partner of The Woodlands-based Foreclosure Information & Listing Service.

Government programs to help borrowers stay in their homes have already delayed large numbers of foreclosures, said Kevin Riles, a Houston-area real estate agent who specializes in foreclosures.

A moratorium may only prolong the pain.

"I'm starting to be of the opinion that we need to go ahead and release some of these properties to the market so we can move forward," Riles said.

In addition to suspending foreclosures, the attorney general asked lenders to halt the sales of properties previously foreclosed on and the evictions of people living in those properties.

Stopping sales and foreclosures will "throw a monkey wrench in the housing market" by creating a backlog of properties for sale, said Jim Gaines, an economist with the Texas A&M Real Estate Center.

"It will take the market a long time to work through and will play havoc on prices," he said.

On the other hand, some distressed borrowers might benefit from a moratorium by getting extra time to pay their mortgages or look for jobs if they're unemployed.

"I think it's going to be a great thing, because it's going to pull the tide of foreclosures from hitting the market," real estate agent Paul Silverman said.

While Houston hasn't been hit as hard by defaults as other parts of the country, foreclosures have affected home values because those houses typically sell for less than comparable properties that aren't in foreclosure.
 

Restraining orders

Consumer advocates were cautious in assessing Abbott's actions.

Attorney Natasha Gransberry has sought temporary restraining orders on behalf of clients who were being foreclosed on despite having modified loans.

She described cases in which loans were sold to new servicers that moved ahead with foreclosures because they didn't know the borrower had a modification in place.

She's urging clients not to rely on Abbott's actions to keep them in their homes.

Richard Tomlinson, director of litigation at Lone Star Legal Aid, said he was happy to see the attorney general take action but isn't sure how much it will help consumers since compliance with the moratorium is voluntary.

"The proof's in the pudding. Based on what he learns, it will be interesting to see what Abbott does," Tomlinson said.

He urged struggling borrowers to seek help from Lone Star or get other legal counsel to stave off foreclosure before their homes are set for sale at auction. Before a foreclosure is complete, an attorney can help qualified homeowners file for bankruptcy or look for legal violations in the foreclosure that could thwart it, Tomlinson said.
 

Business as usual

So far, just one lender, Ally Financial, has agreed to suspend foreclosures in Texas. Disclosures several weeks ago that an Ally employee rushed documents without reviewing them triggered the nationwide attention on robosigning.

Wells Fargo said it isn't planning a moratorium. JPMorgan Chase and Bank of America have declined to comment on the request.

On Tuesday, the day after Abbott's action, the monthly foreclosure auction in Harris County went off as usual.

There were 4,035 properties posted for auction and 1,268 that were actually foreclosed.

"That's about average," LeCureux said. "It looks like they foreclosed the same number they would have any other month."

Postings in September totaled 4,691 - the highest since October 1987, when 4,773 properties were posted.

September totals were up because of the sluggish economy as well as a five-week posting period that gave lenders an extra week to post properties for sale.

"Since the downturn started in late 2008, more and more Houston homeowners have been affected, and as more time passes and with the recovery so anemic, the numbers of late payers are starting to pile up, even in Houston apartments," LeCureux said.

Austin is at the Center of ARM's Rising Challenge to Intel

Austin American-Statesman

On a warm Friday afternoon in early September, many of the workers at ARM Holdings' chip design center on South MoPac Boulevard convened on the roof of the nearest parking garage to celebrate.

They put on their company T-shirts, drank beer or margaritas and hung out under shade canopies while listening to rock music.

They weren't exactly kicking out the jams, but they were celebrating a job well done: the completion of a major new chip project.

ARM had announced the completion of "Eagle" — officially called the Cortex A-15 processor — a few days before. The new design, which probably won't show up in products until 2012, dramatically expands the capabilities of ARM's product line and the kinds of markets it can serve.

The Eagle had landed right in the middle of a computer market dominated by Intel Corp., the biggest and toughest chip company in the world.

Although ARM is based nearly 4,900 miles away in Cambridge, England, Austin is becoming an important focal point for the company. Four years ago, the Austin team designed the Cortex A-8, which these days is being used in smart phones and tablet computers, including Apple Inc.'s popular iPad. The A-15 could extend ARM's reach into energy-efficient computing, wireless base stations and power-efficient Web servers.

"Our team is square in the middle of ARM's strategy," said Ken Reimer, ARM's design center manager in Austin. "For me, there is no better place to do processor design."

ARM, with about 1,700 workers worldwide, is a smallish chip company that punches far above its weight. That's partly because it licenses many of its designs to some of the biggest chipmakers in the world, including Samsung Electronics Co. Ltd., Texas Instruments Inc. and STMicroelectronics NV.

Analysts say TI and Samsung probably paid millions of dollars to be partners in the Eagle project, taking part in detailed discussions about the processor as it was being designed. Not only could they influence the design that evolved, but their engineering teams also got an early look at the technical characteristics of the new processor, so they could plan their own specialized versions of it in the years ahead. (ARM says the licensing fees and other payments it receives from its partners are confidential.)

"On Eagle, we are all over it," said Keith Hawkins, who heads Samsung's newly created processor design team in Austin. "It is a big part of our future."

Samsung is intent on passing Intel to become the world's largest chipmaker, and expanding its production and sales of low-power processors is a big part of its expansion plans.

In Austin, ARM's team has grown to more than 190 people, including chip designers, sales, marketing and support workers, who work with ARM's many partners. Those customer companies turn ARM designs into about 4 billion chips a year, used in everything from smart phones to computer disk drives and industrial control equipment.

Ahead of the power curve

From its earliest days, ARM has focused on chip designs that minimize electrical consumption. Chips that use less power can be used in more products and require fewer engineering steps to keep them running cool.

Whereas many personal computers use chips that consume as much power as a 100-watt light bulb, ARM chips typically use a fraction of a watt. That miserly power usage makes ARM chips a natural for battery-powered mobile devices and for other products for which power savings are crucial.

In Austin, the company has built an engineering team from veterans of other companies, including Texas Instruments, IBM Corp., Advanced Micro Devices Inc. and Freescale Semiconductor Inc.

Newcomers pick up quickly on the company's relentless focus on reducing power consumption. Every thousandth of a watt counts.

They also tune in to the company's collaborative style. New ideas count, but they are frequently challenged and must be proved to be superior.

"Ideas, no matter where they come from, are openly challenged at all levels," said Kerry McGuire, ARM's manager of strategic alliances in Austin. "There is the sense that if you believe in your idea, you will pursue it, and if it is a good idea, it will survive."

ARM focused on power consumption before the rest of the electronics industry realized how important low-power design would become. Now the entire industry is power-aware.

The industry once focused on performance for PCs and servers, but "the entire industry is now driven by mobile devices," said analyst Jim McGregor with technology research firm In-Stat. "Power efficiency is a key factor in all they are working on — even at the server level. It's a dramatic change, and it brings the whole industry around toward ARM."

Squaring up against an industry heavyweight

Intel, formerly an ARM partner, has morphed into a competitor. Intel acquired an Austin-based ARM design effort in 1998 and later sold the business to Marvell Technology Group in 2006.

While it was selling off that business, Intel was stepping up its effort on a new family of low-power Windows-compatible chips called Atom aimed at mobile products. Atom has become a big seller for Intel, especially in the emerging category of smaller, power-efficient subnotebook computers.

While Intel attempts to stretch toward low-power applications, the company dominates the market for processors that go into servers, the workhorse computers that do the heavy lifting involved in running the Internet and much of the world's business and technical computing.

It's a market where ARM had never openly challenged Intel — until now. One of the potential markets for the Eagle chip is seen as low-power Internet servers that do the repetitive work of fetching information for Web users.

To underscore its new interest in the server market, ARM is one of the investors in Smooth-Stone Inc., an Austin startup that aims to create complex server chips from a basic ARM design. Smooth-Stone thinks there is an important market developing among Web companies that want to buy large quantities of low-power servers to handle their sites.

Analyst Joe Byrne sees the coming rivalry between ARM and Intel as a contrast between two companies with different histories and very different business models. Intel, with its enormous revenue and profit, controls everything about its chips — from the engineering design to the manufacturing and the marketing and sales.

But ARM is a much smaller company that gets by with a lot of help from its friends. It had $489 million in revenue last year, compared with Intel's $35 billion.

ARM licenses its basic chip designs to a wide variety of partners that turn them into more specialized commercial products. ARM makes far less profit from the chips it designs, but it works with many customers, each of which takes its own risks on making and selling its end products.

"The fact that they spread their bets is very good for them," Byrne said. "They don't care if TI loses to Qualcomm Inc. because they supply designs to both companies. They have a lot of horses in the race."

ARM's top executives downplay the budding rivalry with Intel. "People want there to be this David-and-Goliath struggle between us and Intel," CEO Warren East told The New York Times recently. "It just isn't that way."

But in Austin, ARM managers know their new chips are starting to tread on Intel's turf.

"In Austin, we have Intel squarely in our view," McGuire said. "We want to defend our place in the mobile market and go after Intel's stronghold in computing and servers."