Chipmaker Atheros Communications Inc. (Nasdaq: ATHR) has started shipping what it claims is the first 802.11g (54-Mbit/s over 2.4GHz) single chip on the market.

Analysts say that Atheros -- along with main rival Broadcom Corp. (Nasdaq: BRCM) -- is pushing chips that combine radio, logic, and memory elements, plus a power amplifier, on a single piece of silicon. It's responding to what it perceives as increasing pricing pressures and demand for lower power consumption and smaller die sizes in the marketplace.

Bob Wheeler, senior analyst at the The Linley Group expects to see more of a price crunch as Taiwanese vendors bring 802.11 chipsets to market. Wheeler notes that top Taiwanese vendor Realtek Semiconductor Inc. already has 802.11 radios and will soon have a two-chip wireless LAN product.

Developing single-chip 802.11 should help vendors like Atheros reduce the price of its chips because they will cost less to produce and package.

Craig Mathias, principal at analyst and consulting firm Farpoint Group reckons that 802.11 single-chip systems will be crucial for vendors that want to introduce cellphones that also support voice-over-wireless LAN communications.

"One of the biggest markets for 802.11 is going to be handsets," he says, "and you have to have a single-chip implementation for that market."

Single-chip systems help to reduce the power consumption of 802.11 systems and are crucial for battery-powered devices such as cellphones.

The Linley Group's Wheeler expects that Broadcom will soon follow Atheros with its own single-chip g product. He says that Broadcom has said it's demonstrated such a product to its customers.

Broadcom is currently shipping an 802.11b (11 Mbit/s over 2.4GHz) system-on-a-chip.

For its part, Atheros couldn't talk about future products as the firm is in its quiet period before it reports first-quarter earnings tomorrow.

— Dan Jones, Site Editor, Unstrung