Digital radio and TV, the ugly ducklings of broadcasting, are set to emerge from niche-market obscurity later this year when the first reasonably-priced receivers hit the high street.

Radio will lead the way. Imagination Technologies, based in Hertfordshire, has developed an audio chip which it claims is the cheapest and most flexible available. Goodman, the UK electronics manufacturer, has already said it plans to launch a range of digital systems priced £99-£200.

Last week the "missing link" was unveiled with the announcement of a new UK chip company, Frontier Silicon, which will license the Imagination technology, package it and sell it to the Asian factories which manufacture most of the world's consumer electronics. Lead times for new products could be a little as six months. Goodman and other electronics companies will brand and distribute the equipment as their own.

Anthony Sethill (pictured above), founder and managing director of the new company - described as a "fabless semiconductor business", that is, one without its own chip-making facilities - is a former managing director of Amstrad, the UK pioneer in low-cost consumer electronics. Its chief technology officer is Ken McAlpine, formerly engineering director of Psion computers.

Frontier Silicon is licensing Imagination's chip know-how and software for a mix of royalty payments and equity. The company has raised £5m from venture capitalists. Shareholders include Digital One, the national commercial digital radio network.

Digital broadcasting's advantages over analogue include quality, text information and a vastly increased choice of channels, but the high cost of receivers, at anything between £300 and £1,000, has restrained demand. Digital broadcasting is also linked in the public mind with pay services.

Sethill says he is aiming primarily at the free-to-air market: "Between 40 per cent and 50 per cent of the British public will never subscribe to pay television." He says contracts are being signed with a number of "silicon foundries" to make the chips. Complete modules, ready to be incorporated in radios, CD players and home entertainment centres will be manufactured in the Austrian factories of Flextronics.

The Imagination chip, known as "Meta", and Frontier's version called "Chorus", are remarkably flexible, he says. It will be possible to incorporate MP3 features - the coding system that allows music to be transmitted over the net - at no extra cost.

Sethill says the company will begin to test a video version of the chip towards the end of the year, increasing the availability of low-cost digital television receivers.

alan.cane@ft.com