With world economies experiencing a tentative recovery and technology spending slowly on the rise, the wireless sector has one of the strongest growth potentials. Wireless systems now cover a wide range of options, in terms of their range, data rates, the services they can deliver and the kinds of customers and devices they target.

For instance, Wi-Fi, until recently confined by its three- and two-chip architecture to products with plenty of space and power, has now been given its ticket to enter the cellular handset market. Two companies — Atheros Communications Inc. and Broadcom Corp. — have combined the three necessary subsystems, radio, baseband and Media Access Control (MAC), onto one chip offering 802.11b or 802.11g communication or both. Philips is on the same road with a two-chip solution.

An interesting recent development is that the cellular power amplifier is being made in a silicon germanium process, allowing it to be integrated with the RF transceiver at some point, particularly the RF component.

Baseband processors are getting more and more powerful, including increases in memory and processing speed. In addition, high-end handsets, which include features such as 3-D games, MPEG-4 video and eventually TV, will assign those functions to a separate applications processor that has the memory and Mips to run advanced functions. Some of these developments are appearing for the first time; others have been around for a while but are now starting to gain some mass traction.

In the past, Wi-Fi was relegated to networking equipment. Wi-Fi ICs consumed a lot of power and cost too much, so the current development of lower-cost ICs with lower power consumption is significant. Wi-Fi ICs have already been embedded in PDAs, cell phones and other small mobile devices; in the future embedded designs in cell phones and other small mobile devices are going to be an important part of the market.

The next technical development will be the release, in mid-2005, of the 802.11n standard. It uses multiple input/multiple output technology, a scalable array of antennas. It will be backwards-compatible with 802.11a and 802.11g, providing both 2.4-GHz and 5-GHz bands respectively and offering minimum rates of 100 Mbits/second. This will allow it to serve as a replacement for 100BaseT Ethernet networks. Expect 802.11n to also push its way into consumer electronics.

In September 2004 we also should see Wi-Fi Alliance certification of two enhancements to the 802.11 protocols, 802.11i and 802.11e. The former will offer enhanced security; the latter will offer quality-of-service enhancements and will come in two versions: wireless multimedia extensions (WME) and wireless scheduled multimedia (WSM). WME, available first, will allow manufacturers to bring higher QoS products to market sooner. The WSM portion will offer superior quality, but it won't be available until later. Products employing it will fall back to WME if they are communicating with a WME-only device.

Meanwhile, WiMAX has a lot of potential — likely with a worth exceeding $15 billion five years down the track. Its standard is fully specified, and WiMAX chips, most coming from Intel and Fujitsu, are going to be available in the second half of this year.

Equipment will start to hit the streets in the first half of early 2005, with sales increasing during the second half of the year. There is still a struggle going on between the WiMAX standard and several proprietary formats, which have some temporary advantage because equipment for them already exists. But over the next five years, proprietary systems' market share will go down as WiMAX's rises and we can expect spending on WiMAX to exceed that for proprietary systems in 2009.

Alan Varghese is senior director of semiconductor research at ABI Research (Oyster Bay, N.Y.).