Ex-Moto division: E-reader prices will fall thanks to new chip

Freescale Semiconductor Inc., whose products power about 90 percent of electronic book readers, said a new chip will help drive down the price of the devices to less than $150 this year.

Freescale, a former division of Motorola Inc., will soon begin offering samples of a new processor that takes on the functions of other chips and thereby reduces e-reader costs, said Glen Burchers, a marketing director.

Amazon.com Inc. and Sony Corp., both Freescale customers, dominate the market for electronic tablets, which the companies predict will eventually replace paper books. Sales in 2010 are on course to double from last year's 4 million units, Burchers said in a phone interview from Austin, Texas, where the company is based.

"There's a big unsaturated market out there, and price is a big factor," Burchers said. "We do see the price of e- readers coming down this year, and Freescale is trying to facilitate that. That's a lot of what this chip is doing."

Freescale's new chip eliminates features that aren't used in e-readers and adds the ability to control their unique display technology, Burchers said. That alone brings a cost reduction of about $30 per unit, he said. The company also makes chips for mobile phones and cars.

Amazon, Sony E-ReadersAmazon's Kindle readers carry retail prices of $259 and $489, while Sony's three models range from $199.99 to $399.99. Burchers declined to comment on when his customers might begin selling devices based on the new Freescale chip. It usually takes about six months from sampling a chip to a finished product going on sale, he said.Apple Inc. plans to introduce its iPad tablet later this month. The device, which partly functions as an e-reader and will retail for $499 to $699, runs on an Apple-designed chip rather than Freescale semiconductors.Amazon's and Sony's readers use E Ink Corp. technology in their displays, which are designed to replicate the look of ink on paper. The displays are currently controlled by separate chips, adding extra cost and slowing down the rate at which pages can be turned.Freescale's faster processor will reduce the lag in turning a page from more than 2 seconds currently to less than half a second, Burchers said.A group led by Blackstone Group LP, Carlyle Group, Permira Advisers LLP and the former Texas Pacific Group acquired Freescale in a $17.6 billion private-equity deal in 2006.