(Corrects headline to show company is selling the chipset for the Android netbooks, not the netbooks themselves)
By Georgina Prodhan
BARCELONA Feb 16 Chipmaker Freescale, which began making chips for small netbook laptop computers last month, plans to expand its offering to include chipsets for Google's (GOOG.O) Android operating system by next quarter.
The privately held company spun off from Motorola MOT.N in 2004 will also collaborate with wireless technology companies Wavecom WAVC.PA and Option (OPIN.BR) to make higher-end netbooks offering faster, third-generation connections.
Netbooks -- pared-down, light, inexpensive notebooks made for easy Web browsing on the go -- have seen explosive growth in the past year and are still a bright spot for computer makers although growth may come at the expense of more expensive PCs.
Google's Android software is so far being adopted by phone companies to make smartphones with computer-like capabilities but is being designed to support all kinds of connected devices.
Freescale expects the amount of netbooks sold this year to double to about 30 million. Mobile research firm ABI Research has a higher forecast of 35 million.
Loss-making Freescale competes with wireless chip giants Qualcomm (QCOM.O) and Texas Instruments TXN.N but says it can connect its chips to the computer's memory far more cheaply.
Most of the netbooks in its target markets, aimed at casual, young users in the West, ship with only Wi-Fi connectivity.
"For price reasons, the netbooks are going to primarily be shipped with just Wi-Fi. For mobile professional users, you do need 3G connectivity," Glen Burchers, marketing director for Freescale's consumer business, told Reuters.
As well as Google Android, Freescale will also support third-generation operating systems from Phoenix Technologies PTEC.O and Xandros starting next quarter, the company said at the Mobile World Congress trade fair in Barcelona.
The netbook market is shaping up as a battleground for Intel's (INTC.O) Atom processors -- which currently have the market to themselves -- and chips based on designs from Britain's ARM (ARM.L).
Freescale has thrown its lot in with ARM, saying ARM-based processors have battery life of about eight hours -- about four times as long as Atom -- less heat generation, eliminating the need for fans, and far cheaper prices.
Burchers said he believed that in time ARM could capture about half the world's netbook chip market, with the first ARM-based netbooks coming to market this summer.
Freescale designs its netbook chips for free software operating systems such as Ubuntu, saving manufacturers the cost of licence fees for Microsoft (MSFT.O) Windows.
"I think for developed countries you'll see good, better and best. I believe the good and better will be based on ARM. I believe the best will be Atom-based and will still run Windows, because you can do more with it," Burchers told Reuters.
Freescale believes netbooks built around its technology will be able to be made at a cost of about $100. Netbook prices currently start at about $200.
Freescale is focused on developed markets but is now talking to Indian technology firm Encore Software, which is reported to be planning to supply millions of ultra-cheap netbooks to India's government as part of an education programme.
"We quickly rushed down there, found who they were and are now engaged with them," said Burchers, when asked about media reports of an Indian government project to supply netbooks for as little as $100. "I do think it's a huge potential market."
Asked about what kind of consumer would buy netbooks in economically hard times, Burchers said: "Nobody needs this stuff but they want it, everybody wants it. And at the price point of $199, it's a great Christmas present or birthday present." (Reporting by Georgina Prodhan; Editing by Jeremy Laurence)