Update: Alcatel-Lucent invests in WiMax chip company

Alcatel-Lucent has invested in WiMax chip maker Sequans Communications, the latest show of support for the emerging long-range wireless broadband technology.

The companies did not reveal the size of the investment but said it extends a $24 million round of financing that Sequans raised last year.

The companies are both based in France and have worked together in the past. Last year they said they would make a low-cost end-user WiMax device for developing countries. They expect to start production of that product in the second quarter.

But making an investment in Sequans might give Alcatel-Lucent an additional measure of control over the direction of technology development at the chip maker, said Caroline Gabriel, research director at Rethink Research Associates.

Alcatel, which completed its merger with Lucent late last year, has also worked with Intel, a Sequans competitor. Alcatel and Intel have said often that they would collaborate on the development of WiMax technologies, including field trials of new products.

Most vendors are using chips from multiple suppliers, said Gabriel. "The large vendors are all looking at a variety of chip suppliers as they pull together their WiMax ranges, not just for competition reasons but because none of the chip providers, including Intel, really cover the whole range of potential products," she said.

For example, Intel's competitors are offering products that may be more advanced and have a smaller footprint and low power consumption, meaning they are better designed for use in small devices like mobile handsets, she said.

"Several of the original Intel supporters -- Alcatel, Nortel, Airspan, etc. -- were only using Rosedale in very selected products and looking elsewhere, to companies like Sequans and Runcom which had more advanced technologies," she said. Rosedale is the name of Intel's WiMax chips.

Intel worked aggressively to develop a market for WiMax. Nonetheless, other chip makers including Sequans, Fujitsu, and Wavesat have emerged as competitors.

Before the merger, Lucent sold WiMax products using gear from Alvarion, which uses Intel chips.

Motorola also invested an undisclosed sum in Sequans late last year.

After years of development, WiMax is just beginning to pick up steam. U.S. operator Sprint Nextel intends to build a WiMax network, and Clearwire has built several networks in Europe and parts of the U.S.