In a blow to Microsoft's smartphone plans, BenQ, Taiwan's largest handset maker, has announced that it will design and develop next-generation mobile phones based on the Symbian operating system.

The companies said Wednesday that they have signed an agreement that gives BenQ access to Symbian OS source code and that, subject to further agreement, BenQ will manufacture and market Symbian OS smartphones for 2.5G and 3G networks.

The first product, which is expected to be available by the third quarter, will be a data-enabled smartphone integrating the UIQ user interface also licensed by Sony Ericsson for its P800 smartphone. UIQ is a subsidiary of Symbian.

In addition to BenQ and Sony Ericsson, Nokia, Samsung and Siemens have also licensed Symbian's operating system. Two other Taiwanese companies, High Tech Computer and Compal Electronics, have developed smart phones that run Microsoft's Windows Powered Smartphone 2002 software.