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The "Navigation I" chip was developed by the Shanghai Fukonghualong Technology.
Yang Hong is the marketing director of the company.
"The chip is as small as a cell phone chip, only 6mm by 6mm, much smaller than the previous ones. Also, the cost has been greatly reduced from 20,000 yuan, or more than 2,800 US dollars, to less than 1,000 yuan, or about 140 US dollars."
The chip can be applied on China's homemade Beidou satellite navigation system.
It's expected to break the monopoly held by the Global Positioning System, or GPS system, in the satellite navigation field.
China is one of the several countries in the world capable of developing such a system on its own.
The system can help clients know their location at any time and place with accurate longitude and altitude data.
It will be used in the coming Beijing Olympics to pinpoint traffic congestion and supervise venues along with the GPS and will also appear at the 2010 Shanghai World Expo.