By enabling its existing Bluetooth silicon to run GPS software, CSR said it can offer huge power savings compared with silicon-based competitors whose technology was developed for automotive markets where power is not a problem.

The Cambridge, UK-based company has paid $40m for NordNav Technologies AB, a Lulea, Sweden-based company which has developed a software-based GPS system. It is also eligible for a further payment of $35m if it meets financial objectives.

CSR has also paid $35m for Cambridge, UK-based Cambridge Positioning Systems Ltd, which has developed extended GPS with a triangulation system that can pinpoint locations based on a receiver’s distance from nearby base stations. This version of GPS is regarded as an essential complement for satellite-based systems in that it produces a far quicker fix and can operate in areas with poor satellite reception such as built-up city locations.

It said the system would also be compatible with assisted GPS, where additional guides to accuracy are picked up from a server on the carrier’s network.

CSR, which dominates the Bluetooth chip market, now hopes to replicate its success in GPS systems, which just beginning to take off at the top end of the mobile phone market.

The company said ABI Research has forecast that the number of GPS chips shipping into mobile phones will increase at the rate of 45% per year between 2006 and 2011 to around 200 million chips.

CSR said it expects its low-cost software-based GPS would drive an increased penetration into mobile phones. It believes it can accelerate this growth by reducing the cost so that GPS can penetrate mass-market phones. While it had been regularly doubling revenue each quarter, CSR has seen growth slow to 30% as the big expansion in handset sales has been in developing markets where low prices are valued more than the comparative luxury of Bluetooth. By adding a much-sought-after function such as GPS to Bluetooth, CRS believes it can add to its Bluetooth sales.

CSR has already added FM radio to its chipset. The additional of GPS means that the same radio is capable of Bluetooth operation, while providing a FM feed and at the same time listing out to the signals from three satellites.

CSR expects to offer its first GPS products during the first half of 2007 and forecasts that both acquisitions will be earnings-enhancing in 2008. It said the software will also be compatible with the Galileo GPS system, which is due to come into operation in 2010.

As well as gaining a range of patented technologies from the acquisitions, 40 employees will join CRS from Nordnav and 15 from CPS.

CSR has also been developing other wireless technologies such as WiFi, FM, UWB, and WiBree. It is now expecting design wins from handset makers from its plunge into the GPS market. It will also open up the market for location-based systems in other new markets, such as tracking the position of assets in plant and building sites.

CEO John Scarisbrick said customers are enthusiastic for GPS at this much lower price point. He said CSR would continue to invest both organically and via complementary acquisitions to further improve its product offerings, enhance its customer proposition, and maintain its competitive advantage.