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Sony, NXP to develop short-range wireless chip

Partnership will produce secure processor that enable mobile phones to be used for "contactless payments."

Sony and former Philips chip unit NXP Semiconductors have announced they will create a joint venture to create a secure chip that enables short-range wireless interaction between handhelds, PCs and other consumer electronic devices.

In a memorandum of understanding, the companies said their joint venture will be set up in mid-2007 and will be charged with creating a secure near-field communications (NFC) chip that works with various flavors of NFC-compatible phones, such as Sony's Felica and NXP's Mifare systems.

NFC wireless technology, which is similar to that used in the London Underground for making contactless payments, can be used for ticketing or making small purchases via a mobile handset.

According to NXP and Sony, consumers with phones sporting the chip will be able to buy all sorts of services from different providers, although both will continue to develop their respective platforms separately.

The GSM Association is a trade group that promotes GSM (Global System for Mobile Communications), which is a European standard for mobile technology. The association is also cheerleading for NFC, reporting that operators serving 40 percent of the world's subscribers are working on the contactless payments. The association is also "co-ordinating the NFC initiative to encourage a common approach to the implementation of NFC technology in mobile phones."

The association is calling for common NFC standards, which it asserts will lead to interoperability and mass-market adoption.

Such widespread adoption has so far proved elusive for NFC. Despite big-name backing for the technology, analysts have recently reduced their forecast for NFC chip shipments, saying there aren't enough imaginative services yet to spur faster adoption.

So far, there have been a handful of pilots using the mobile technology and a launch of a contactless-payment system in Germany where people pay for travel by tapping their mobiles onto NFC readers.

Jo Best of reported from London.