Handheld maker Palm has announced that it has chosen chipmaker Texas Instruments to power its next generation of wireless handhelds. The two companies will work together on technology, product collaboration and joint marketing.

Under the deal, Palm’s upcoming wireless devices will use Texas Instruments’ chips and its OMAP (Open Multimedia Application Platform) blueprint for wireless devices. Palm products that incorporate OMAP will be available within a year.

Todd Bradley, Palm’s chief operating officer, said on a conference call that TI will be a ‘preferred’ supplier but that the contract is nonexclusive, which means that Palm can still use chips from other manufacturers. Chipmakers Intel and Motorola have been competing with TI to provide chips to handheld market leader Palm. All three companies are working on chips based on designs originating from Cambridge, England-based ARM Holdings.

The announcement comes as Palm is transitioning its handheld operating system over to ARM-based chips. This move will make its devices more powerful and better capable of meeting the needs of corporate customers, which analysts identify as the major opportunity for growth in the handheld market. ARM-based chips will generally provide higher levels of performance than Palm’s current chip, the Motorola Dragonball.

Intel and Palm have been in discussions over adopting Intel’s upcoming XScale processor, which uses an ARM core. Palm has also been in talks with Motorola to use its upcoming ARM-based chips.

Microsoft earlier this year said it planned to standardise its Pocket PC operating system for handhelds on ARM-based chips. Bradley said that Palm is also working on a handheld that uses the GPRS wireless network.