Analog Devices Harnesses a Wii Hit

But will the new manufacturing approach produce profit margins that are at or above the company's corporate average?

"We'll sell a lot of products that go to consumers that we make very good margins on," says Fishman, without commenting on the MEMS group's current or future margins.

While ADI says its MEMS business is profitable, analysts believe the group's gross margin is below ADI's 57% level. And it's likely that the consumer portion of the MEMS business sports lower margins than the automobile and industrial portion, since the latter require chips with greater reliability and precision.

As with any consumer gambit, of course, the idea is to offset lower profit margins with massive volume. And the deep bench of consumer electronic devices offers plenty of opportunity.

To become a viable technology in cell phones, ADI will need to reduce the price of its MEMS to about $1 per chip, reckons Deutsche Bank's Seymore. An ADI spokesman says the company currently sells MEMS for as low as $2 a chip and expects to hit the $1 level in the next few years.

The bigger rub is that for MEMS to really take off in consumer electronics, ADI is dependent upon potential customers coming up with a revolutionary idea for its chips -- the next Nintendo Wii. That's a much different proposition than selling a radio chip for cell phones, in which the need for the component is already well-established and understood.