Philips on Monday introduced the new chip, dubbed SAA7108A/09A HD-CODEC. The codec acts as a translator, decoding digital TV signals and allowing them to be viewed on a television or computer displays.
The chip is the first to combine the two standards for digital television, known as standard definition and high definition, or SDTV and HDTV.
The chip comes at a time when broadcasters are beginning to transmit standard digital television. Most stations are making the transition now, having been mandated by Congress and the Federal Communications Commission to begin transmissions by May 1.
Throw in a low price, as little as $18 when purchased in mass quantities, and manufacturers could produce low-price digital TV receivers that by the end of the year make digital available to the masses for free, analysts said.
Though HDTV is better known and offers a better quality picture, SDTV is more readily available, say analysts such as Richard Doherty, director of the Envisioneering Group.
It is this format, which is roughly up to two times better in quality than standard broadcast TV, that could pose a threat to cable.
Using the SDTV format, broadcasters can fit about five channels in their own slice of bandwidth, analysts said, including their standard broadcast and several SDTV channels. As a result, a CBS affiliate could theoretically broadcast CBS programming and add in other channels owned by the company's parent, Viacom.
With additional channels available for free, "Consumers will say, 'Ah, there's an alterative to cable or satellite?because I can now get 12 channels instead of five in my city.'" Doherty said.
But Doherty said the best potential thing about SDTV is that it is free "as long as you have the right tuner for it."
The new $18 Philips chip will make it possible for televisions and computers to tune in to these new channels.
This chip "could enable low cost DTV receivers (such as set-top boxes)?by the end of 2002," Doherty said. Whereas the cheapest HDTVs are about $2,000, set-tops using the new Philips chip could cost as little as $200 to start.
"To make an SDTV receiver a lot cheaper than an HDTV receiver just wasn't possible before the Philips" announcement, Doherty said.
Philips, which is one of the largest suppliers of codecs and other chips used in consumer electronics devices such as televisions, is expected to release its own digital TV receivers this summer or fall. Other companies are expected to follow at about the same time.