Telecoms equipment giant Lucent has launched a spin-off to develop highly integrated systems on silicon chips aimed at next-generation internet appliances, such as personal digital assistants and mobile phones.

The venture, called SyChip, will provide complex chip-scale modules that integrate memory, logic, analogue, digital and passive functions on a single chip of silicon.

SyChip has already received a multimillion dollar investment from APack Technologies of Taiwan and Lucent is looking for other investors.

SyChip, which was formed with people and technology from Lucent's Bell Labs research unit, plans to begin shipments to mobile phone manufacturers later this year. Chips for laptop computers will be the venture's next project.

Initially SyChip will focus on integrating proprietary radio frequency (RF) components and chip-on-chip interconnect technologies for wireless internet appliances that conform with standards for systems such as global positioning systems, third-generation general packet radio service and the emerging Bluetooth wireless Lan standard.

Dennis Peasenell, SyChip president and chief executive, said: "RF modules operating at 2.4Ghz are difficult to build because of their complexity and the variations in performance of their conventional passive components, such as resistors, capacitors and filters."

He said the combination of Bell Labs technology is expected to help product designers significantly reduce their time to market while also reducing the size and cost of their products.

Researcher Prismark Partners predicts that the worldwide market for wireless chip modules will rise from $3bn this year to $11bn in 2004.

SyChip is the sixteenth venture to come out of Bell Labs under a scheme which allows the unit to set up businesses with products that Lucent decides not to keep in-house.