The market for mini wireless LAN chips that will -- if all goes to plan -- power the next generation of WiFi devices is starting to heat up.

Atheros Communications Inc. (Nasdaq: ATHR) and Conexant Systems Inc. (Nasdaq: CNXT) have both announced small, inexpensive, low-power chips aimed at WLAN phones and other battery-powered devices. Conexant says it is shipping its single-chip 802.11g (54 Mbit/s over 2.4GHz) CX3110X silicon now. Atheros claims it is sampling single- and dual-band chips, the AR6001G and AR6001X, that will support 802.11g and 802.11a/g (54 Mbit/s over 5GHz) respectively. The firm plans to start shipping them in the third quarter.

So why do we need yet another type of wireless LAN chip -- especially in a market where low margins and high volume are practically a given?

Simply put, mobile convergence can't happen without such silicon. Handset vendors need low-power chips to make WLAN and dual-mode phones -- as well as a plethora of consumer devices connected to 802.11 networks -- that won't suck battery life harder than a dustbuster in a wind tunnel (see Report Eyes Convergence Glitch) The challenge in this market will not be to have the fastest WLAN chips, but the smallest and most power efficient.

Alex Liu, product line manager at Atheros, reckons ease of use will also become more of an issue as wireless LAN becomes a "true mass-market" technology. "Look at what we do now, we type in SSIDs... Hex Keys... It's ridiculous, it's not something you can expect your mother to do," he opines.

Both companies will be competing with established firms like Texas Instruments Inc. (NYSE: TXN) in the cellular market. Liu says that Atheros has some Tier 1 OEM trials.

"It is early days yet; nothing is closed to us," he says.

— Dan Jones, Site Editor, Unstrung