Frontier Silicon is to develop a new DAB radio chip as part of a $10m investment plan.
The fabless chip company said it has been encouraged by the Government's plans for extending the UK's digital broadcast and communications infrastructure by 2012.
"The cost structure and performance of the new DAB chip will assist the Government's aim to achieve the necessary criteria for a digital migration of radio by 2015," said Anthony Sethill, chief executive of Frontier Silicon.
"We now look forward to harnessing the success of this advanced DAB technology as we develop a concrete Digital Migration Plan with the Digital Radio Delivery Group," said Sethill.
The silicon, known as Chorus 3, is intended to be a new type of very low-cost and lower-power DAB digital radio device which the company hopes will help drive the national migration to DAB digital radio over the course of the next ten years.
In particular, the chip, which will be designed to cut cost and power consumption by up to 50%, will be targeted at the introduction of digital radio in cars.
The company, which supplies the technology for the majority of digital radios sold in Britain, anticipates that the new chip will be shipping to receiver manufacturers by early 2010.