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Atheros thinks small to grow Wi-Fi market

The company has developed a component it says make it easier and cheaper to add Wi-Fi capabilities to a range of consumer electronics devices.

Atheros Communications has developed a component that makes it easier and cheaper to add Wi-Fi capabilities to a range of consumer electronics devices.

The Sunnyvale, Calif.-based start-up announced Monday that samples of the low-power component have been sent to manufacturing partners, with high-volume production expected in the second quarter. The part is based on the 802.11g standard and combines the functions of two chips into one: a Media Access Controller, baseband processor and 2.4GHz radio.

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By shrinking the part, dubbed AR5005G, Atheros is expanding the size of its potential market by addressing what consumer electronics companies have been asking for--lower cost and higher throughput, according to Colin Macnab, vice president of marketing and business development.

Lowering the cost can "can result in exponential growth in the consumer electronics market," Macnab said. "The biggest driver for wireless networking is into the home...Wireless delivery of video is where the opportunity lies and high bandwidth is important for that."

Macnab acknowledged that transmitting video is still in its early stages but that it should be more common by the end of the year. Products based on the 802.11g standard transmit data at about 20 megabits per second.

More consumer electronics devices are including Wi-Fi capability as use of digital media, such as music and videos, continues to grow. Wi-Fi networks allow for easy access to digital media stored on various resources, such as PCs, connected to a network.

Shipments of wireless networking cards and access points jumped to 22.7 million units in 2003, an increase of more than 200 percent compared with 2002, when 7.2 million units were shipped, In-Stat/MDR said in a report earlier this month.

Atheros' new 802.11g component is 35 percent smaller and up to 40 percent less expensive to make than the previous two-chip part. It also consumes less power than previous generations of chips while not degrading the range or performance, according to the company. Atheros would not provide details on pricing.

Competitors are set to release low-power and single-chip 802.11b parts targeting cell phones and handhelds later this year.

Late last year, Atheros filed a prospectus with the Securities and Exchange Commission for an initial public offering to raise about $100 million. The company intends to use the proceeds to repay about $4 million it borrowed from Silicon Valley Bank and the remainder for general corporate purposes, including working capital and capital expenditures, according to the filing.