E Ink and Freescale Semiconductor, two of the technology suppliers behind many of today's electronic readers, have joined forces in a development deal they say will lower the costs of manufacturing the devices and give them more potential features. Their work could have implications for Amazon.com's Kindle and its growing band of competitors.

E Ink, of Cambridge, Mass., and Freescale, of Austin, Tex., are working on a new "System-on-a-Chip" that integrates E Ink's Vizplex display with Freescale's processor technology. From the press release:

The partnership is designed to lower costs and expand the ecosystem of supporting electronics for the eBook market. The collaboration is also expected to spark innovation for emerging product categories such as eNewspapers, tablet PCs, laptop secondary displays, eNotebooks, and eDictionaries.

It will be interesting to see how this technology plays out. Amazon and a variety of other e-readers (including the just-announced Nook from Barnes & Noble) use E Ink displays. Freescale is also a big player in the market. According to research firm iSuppli, Freescale makes the processors used in Kindle 2, though Amazon hasn't talked about that, to my knowledge.

Will the new chip add to the downward price pressure on electronic readers? Amazon has been lowering the price of its basic Kindle (now $259), though it maintains a higher price point on the larger-screen Kindle DX ($489). Sony has a $199 reader on the market. A recent report from Forrester Research suggested many consumers are waiting for prices to drop to the $99 level or lower.

Taiwan's Prime View International, which manufactures Kindles, is in the process of acquiring E Ink. That deal is expected to close in December.

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