CORRECTED - UPDATE 1-Intel's low-cost laptops expand to US, Europe

(Corrects last name of Intel executive Lila Ibrahim in second paragraph) (Adds details on future models, background, bylines)

By Jim Finkle and Duncan Martell

BOSTON/SAN FRANCISCO, March 19 (Reuters) - Intel Corp (INTC.O), the No. 1 computer chip maker, said on Wednesday that U.S. and European consumers will soon be able to buy sub-$300 laptops it designed for poor school children in developing markets.

Its Classmate PC is the latest super low-cost laptop headed for retail sale in the developed world, said Lila Ibrahim, general manager of Intel's emerging market platform's group.

Although Intel designed the device, PC manufacturers will produce it like other personal computers using Intel chips, sghe said.

It will compete with Taiwan's $399 Windows Asustek Computer (2357.TW) Eee PC, which has flown off store shelves from Asia to North America since it was launched last year, and the XO Laptop, a computer that runs on the Linux operating system produced by a Massachusetts-based non-profit foundation.

Ibrahim declined to name the PC makers, saying those companies had asked Intel to keep their names quiet until they ready to unveil the models.

The chipmaker has conducted pilot tests of the devices in the United States and Australia, she said, but declined to name the schools where they are being tested.

She said that India's HCL, Indonesia's Zyrex and a manufacturer in Mexico already have begun selling Classmate PC laptops on the retail market.

To date Intel has sold fewer than 100,000 of the Classmate PCs, but plans to ramp up production in 2008.

It has developed a second model, the Classmate 2, and has already begun work on a third, the Classmate 3, Ibrahim said.

"With the second generation there will be more choices for manufacturers going into retail," she said.

That will give them flexibility to build a range of laptops with different memory configurations, screen sizes and various peripheral devices including cameras, she said.

The Classmate's key rivals in the super low-cost laptop market are the $399 Eee PC from d the XO Laptop, which costs $188 to manufacture and is sold by the non-profit One Laptop Per Child Foundation.

Asustek is the world's No. 1 maker of computer motherboards.

Inventor Mary Lou Jepsen, a scientist who developed the XO Laptop, resigned from the foundation at the end of last year and started her own company Pixel Qi with the goal of building a $75 laptop by 2010. (Reporting by Jim Finkle in Boston and Duncan Martell in San Francisco; editing by Carol Bishopric)