LG Electronics, the world’s second largest maker of televisions, has adopting ARM’s processors in its line-up of future digital TVs, one more sign of momentum for ARM (ARM.L).

ARM‘s chip designs have become popular in mobile smart phones, because they use little power, and they’ve largely killed chip giant Intel’s ambitions so far in that market.  ARM has more than 500 customers who license its microprocessor designs. So today’s announcement isn’t that surprising.

But it does signal an important change for TVs. LG says it’s adopting ARM because the newest TVs have so many computer-like Web 2.0 features in them. In the past, TV makers often used their own custom microprocessors whose only job was to display video at the highest quality and fastest possible speeds.

But digital TVs are now more like computers. With features such as the Yahoo Widget Engine, TVs can now display web sites. You can, for instance, quite easily do a Yahoo search or watch YouTube videos on such TVs. For the newest models debuting this year, users will be able to access web sites on the TV screen with one or two clicks of the remote.

That’s why it makes sense to shift toward a more general-purpose architecture such as ARM. The ARM architecture is common in low-power consumer devices. It’s in the iPhone, the Palm Pre, the iPod, Nintendo DSi and a ton of other gadgets. The software that runs on the ARM processors is fairly ubiquitous, and it’s not so hard for ARM-based devices to run Flash media players or display web sites of any kind. Hence, ARM makes sense in web-connected digital TVs too.

LG is licensing the ARM11  MPCore processor, which has multiple cores, or brains, on a single chip. LG will also use the ARM Mali graphics chips for video processing and for displaying web sites on a TV. In choosing ARM, LG clearly chose to avoid Atom-based processors from Intel. That tells us a little about the state of competition between ARM and Intel. But it’s possible LG might use Intel in future TVs as well. Intel helped Yahoo develop the Yahoo Widget Engine, but LG is going with ARM instead of Intel at this juncture.