Freescale Semiconductor says its newest chip will help drive down prices in the next generation of electronic readers, which analysts say is key to the devices gaining mass adoption.

Freescale's next-generation e-reader chip combines two important pieces -- an applications processor and a display controller -- into a single piece of hardware, which the company says will cut the retail price by around $30.

Cost is really the main driver of the market's growth, said Glen Burchers, director of global consumer marketing for Freescale. He said the chip will also allow for faster, more responsive performance.

Privately held Freescale, whose chips are already used in Amazon.com Inc's Kindle and Sony Corp's Reader, says it controls 90 percent of the market in e-reader applications processors.

The technology world has seen a burst of new players jumping into the e-reader market, providing fresh competition for market leader Amazon.

Strong growth is forecast for the industry. Research group DisplaySearch expects the global e-reader market to more than triple in 2010 to more than 14 million units.

Analysts say the market is still limited by high prices. The lowest price Kindle from Amazon is $260, while Samsung's new E10 is about $700. Freescale says the market will open up even more when prices fall below $200.

And some believe the e-reader market is already imperiled by a coming wave of touchscreen tablet computers, led by Apple's iPad, which offer e-reader-like functionality along with more computing power.

But Burchers said the main demographic for e-readers -- users in their 40s for whom reading is the main leisure activity -- ensure that there will always be a market for a dedicated device.

He said Freescale's new chip will be in e-readers on store shelves by the end of the year.

(Reporting by Gabriel Madway; editing by Gunna Dickson)

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