Reuters
Monday, January 29, 2007; 3:13 AM

NEW YORK (Reuters) - Atheros Communications Inc. <ATHR.O> said on Monday it would start to make chips based on Bluetooth technology in the first quarter in a bid to expand its share of the fiercely competitive wireless chip market.

Atheros -- one of the top makers of chips for Wi-Fi, a short-range technology used to connect laptops to the Web -- is now planning a range of chips based on Bluetooth, another short-range technology often used to wirelessly connect phones or other consumer electronic devices to headsets.

Bluetooth competitors include market leader CSR <CSR.L>, which has a roughly 50 percent share of the market, and Broadcom Corp. <BRCM.O>, NXP <NXP.UL> and Texas Instruments Inc. <TXN.N>.

But as both Wi-Fi and Bluetooth are being embedded into an increasing number of phones, iSuppli analyst Jagdish Rebello said it makes sense for Atheros to support both as some phone makers may want a single supplier for both chip technologies.

"It's not going to be a walk in the park for them to get into this market but it's something they need to do," said Rebello, who sees Bluetooth, often described as personal area network technology, as one of the fastest growing wireless technologies.

"You're going to see a lot wireless semiconductor suppliers target the Bluetooth and wireless personal area network market," the analyst said.

Atheros competes with Broadcom, Intel Corp. <INTC.O>, TI, Marvell Technology Group Ltd. <MRVL.O> and Conexant Systems Inc. <CNXT.O> in the Wi-Fi chip market. Broadcom is already the second biggest Bluetooth chip maker with an estimated 20 percent share of the market, according to Rebello.

Atheros said its first Bluetooth chip, expected to become available this quarter, could be used to connect laptops or desktops to devices such as keyboards, mice or cell phones.