(Bloomberg) -- Semiconductor maker Advanced Micro Devices Inc. is betting that a purchase of a Texas-based chipmaker will help drive the adoption of more portable virtual reality headsets.

Advanced Micro Devices announced its purchase of Nitero Inc. for an undisclosed price on Monday. Nitero has developed a 60 gigahertz wireless chip that it says can transmit high-resolution video without any delays or lags.

Roy Taylor, AMD’s vice president of alliances, said Wednesday at an industry conference in Bristol, England, that virtual reality’s growth has been held back by VR headsets’ need to be tethered to a personal computer or gaming device with a thick cord.

The Nitero acquisition gives AMD the ability to offer an end-to-end solution for virtual reality and augmented reality, encompassing everything from the computerized brains that process the video, layer it with other digital content, control memory storage and now enable that video to be transmitted wireless, Taylor said in an interview.

Pat Kelly, Nitero’s chief executive officer, said that his company -- originally spun out of an Australian government-sponsored research center -- was targeting the next generation of virtual reality headgear makers. He wouldn’t say when these new types of headsets might come to market.

Still Early

Taylor rebutted the idea that lower-than-projected sales of headsets, like Facebook Inc.’s Oculus or HTC Corp.’s Vive, mean that virtual reality is overhyped and wouldn’t become a mainstream technology. Such criticism, he said, was like Time magazine saying in 1994 that the internet would never amount to anything.

He noted that in many fields -- such as architecture and medicine -- adoption of virtual reality and augmented reality was advancing far faster than analysts had predicted.

Advanced Micro Devices, which is headquartered in Sunnyvale, California, expects that the growth of virtual reality and augmented reality will lead to higher demand for the company’s high-end graphics processing units and central processing units. To promote these technologies, AMD has helped sponsor virtual reality films, games and stand-alone experiences.

“Anything that is good for VR is good for AMD,” Taylor said.

He cited estimates that 23 million room-based virtual reality headsets will be in users’ hands by 2020 and consumers will purchase 122 million mobile-based virtual reality headsets, such as Google’s Daydream.

Overcoming Obstacles

Taylor said the high video frame rates required to produce virtual reality that people can watch without feeling sick pose a challenge for filmmakers and game designers. Chipmakers will soon overcome this technical hurdle, he said, citing Nitero’s super-fast Wi-Fi as one example.

“The competition between us at AMD and Nvidia and Intel is fierce and we are going to produce better and better GPUs and CPUs,” he said. “Don’t think about rendering today, think what rendering will be like in one to three years from now.”

AMD sees location-based virtual reality experiences, where people pay to view VR content in places like shopping malls, are also going to be a key business model and will help spread the technology. AMD has partnered with a number of these venues in the U.S., Europe and Asia, Taylor said.

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