Following the descent of computer maker Apple into the toy industry, chip makers are hoping to make a buck or two building chips to create smart toys.

Design houses, including Pixart Imaging, Ralink Technology, Realtek Semiconductor and Sonix Technology, are gearing up to develop new chips for smart electronic toys.

DigiTimes said that designers have seen orders for ICs used in conventional toys slump since the economic downturn. Competition is tough with most of the rivals from China.  But apparently the market for high-end electronic pets which come with networking, image sensing and face recognition functionalities, is booming.

The good part about it is that such chips do not have the high development and R&D costs of computer chips and are easier to make.