Comms chips

Atheros Gets Into Cellular

Wireless LAN semiconductor company Atheros Communications Inc. (Nasdaq: ATHR) is making the jump into the cellular market with cheap chips for the Asian market.

The company announced its first ever non-802.11 product today, introducing the AR1900, a single-chip offering for the personal handyphone system (PHS) market. PHS networks are wireless local loops – often installed by wireline carriers – that use a mini-cell architecture to deploy voice and data services inexpensively in towns and cities.

The major market is in China, which has about 65 million subscribers using PHS, known locally as the personal access system (PAS). There are also around 3 million users in Japan, where the system was first introduced in 1995.

So, why has Atheros – which has always been on the cutting edge of wireless LAN – chosen to enter the cellular market with a chip that supports what many would see as an outdated technology?

"There's less competition and fewer barriers to entry," Atheros's president and CEO Craig Barratt tells Unstrung. "PHS is underserved by semiconductor companies."

By introducing the first single-chip system for the PHS market, Atheros hopes to undercut rivals and give the market a new lease on life. "PHS is the lowest-cost cellular technology, but we think we can make it even cheaper," says Barratt.

By taking this route, Barratt says Atheros is more likely to realize "real revenue growth," rather than trying to take on the likes of Texas Instruments Inc. (NYSE: TXN) and others in the fiercely competitive market for GSM and CDMA chipsets.

Of course, one way that Atheros may help to extend the life of the PHS market is by combining the technology with its WiFi know-how to produce a dual-mode chipset.

"There's an interesting possibility of combining the technologies," says Barratt. He notes that PHS operators could even collocate 802.11 access points with their existing cell sites, since PHS doesn't have much more range than wireless LAN.

Barratt says he still considers 802.11 chips the company's core product, but that the company wants "more than just success in the wireless LAN market."

"If we look at all the truly successful semiconductor companies, they have always diversified into multiple markets," he comments. — Dan Jones, Site Editor, Unstrung

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