MediaTek has reached an agreement with Yahoo under which the IC designer will embed Yahoo's services into its chips targeting smartphones and 3G handsets, according to the companies.

Yahoo's mobile Internet services including Yahoo Messenger, News, Finance, Weather and Mail will be allowed to run on MediaTek's new middleware technology dubbed "MAUI Runtime Environment (MRE)," designed for mobile developers to deploy services and content on the phones.

MediaTek said it has been working closely with handset brands such as Cherry Mobile, Spice Group, Spice CSL and Nexian to develop products based on the MRE technology, and is also negotiating with other brands for cooperation.

"The mobile Internet presents a wealth of opportunity for Yahoo! and our partnership with MediaTek will further connect us with our audiences in growing markets such as Indonesia, Malaysia, Philippines, Vietnam and India where new to Internet users are coming online for the first time through their mobile devices," said Rose Tsou, senior VP of Yahoo Asia Pacific.

MediaTek forecast that total shipments of its handset ICs will likely reach 550-600 million units in 2011, compared to about 500 million units shipped last year.

In other news, MediaTek has reiterated its target of 5-12% sequential growth in second-quarter 2011 revenues remains unchanged. Market watchers recently speculated that MediaTek is likely to revise downward its revenue estimate for the quarter due to a weaker-than-expected May.