updated 2/14/2005 8:49:30 PM ET 2005-02-15T01:49:30

Texas Instruments Inc., which makes computer chips for more than half the world's cellular phones, said Monday it is testing a new technology that could drive down the price of high-end features.

The big semiconductor company said it has developed a single chipset that contains a modem and a processor on a single piece of silicon, replacing two components with one.

Company officials say the new design will make it cheaper to build a phone that runs video at 30 frames per second or handles 3-D gaming, capabilities available now only on expensive phones.

"We're going to drive them down into meat-and-potatoes phones that have the largest market share," said Doug Rasor, a marketing vice president at Dallas-based Texas Instruments.

The company announced the new chip design before the opening of a major trade show for cell-phone makers and suppliers, held in the French resort city of Cannes.

The new technology, called OMAP-Vox, would also use less power than current chips, the company said. Phone manufacturers are testing it and it could show up in store displays by the end of this year, Rasor said.

Texas Instruments declined to identify the companies that are testing the new design beyond saying one is in Europe and another is in Asia.

Neil Strother, senior analyst with technology research firm In-Stat, said the Texas Instruments component could help bring the cost to produce a feature-laden phone down to about $125 to $150. That could mean a $75 price to the consumer, after subsidies that are commonly offered to U.S. subscribers of phone-service plans, he said.

"Most people are willing to pay about $100, maybe $125 for a really cool phone," Strother said. "You get past that and they start to say, 'Well, I don't know,' even though the phone might have cost that much to build."

Texas Instruments is trying to boost revenue by making more-advanced chips. It also stands to profit if sales of so-called 3G phones ever reach the lofty targets set by some industry officials and pundits. Third-generation phones operate on high-speed wireless networks capable of transmitting multimedia such as streaming video.

But the company is under constant challenge from competitors such as Qualcomm Inc. Intel Corp., the world's largest chipmaker and best known for powering personal computers, is also working on a streamlined chip for high-end phones.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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