Mobile Gadgets Fuel Chip Sales

Once reserved for industrial and automotive applications, such as airbag sensors, MEMS, or microelectromechanical, chips are increasingly being designed into consumer electronic devices such as cell phones.

ST Microelectronics(STM Quote), one of the main MEMS makers, has said it expects to reduce the cost to $1 per chip in 2008 -- a level that analysts believe will make the technology viable for a broad array of handsets.

And the recent string of acquisitions of GPS chip firms -- Broadcom(BRCM Quote) shelled out $146 million for Global Locate in June, and Atheros Communications(CY Quote) bought U-Nav in December for $54 million -- points to another rising silicon star within cell-phone handsets.

Smartphones featuring GPS chips, which communicate with overhead satellites to determine geographic location, are quickly emerging as an alternative to stand-alone navigation devices, according to the industry research firm iSuppli. The firm projects that the number of GPS-enabled cell phones will grow roughly 49% in 2008, from 162 million devices to 240 million.

Even Intel(INTC Quote), the dominant maker of PC and server microprocessors, is keen to get in on the handheld action. The company will release an energy-efficient mobile processor in the first half of 2008 dubbed Silverthorne, which uses the same x86 instruction set as its PC microprocessors.

Intel hopes Silverthorne will entice tech companies to develop a wave of new handheld gadgets that it refers to as mobile Internet devices. But Intel will be entering a crowded field, where chip heavyweights such as Texas Instruments(TXN Quote) and Qualcomm(QCOM Quote) already sell application processors for smartphones.