The market has already seen the fallout from the MP3 slowdown, especially NAND-based flash memory makers. Spot prices for NAND-based flash memories have tumbled and fallen by up to 63 percent since the beginning of this year, according to the DRAMeXchange.

In the flash-memory space, lackluster iPod shipments impact the likes of Hynix, IM Flash, Samsung and Toshiba. Other chip makers, including PortalPlayer, SigmaTel and others, have been hit hard by the iPod slump.

In a report, Harry Blount, an analyst with Lehman Brothers (New York), reduced his forecast for Apple in the March quarter. The analyst also lowered his forecast for worldwide iPod shipments from 9.75 million units to 9.5 million units in the March quarter.

The consensus on Wall Street is that Apple (Cupertino, Calif.) will ship 9.6 million units in the March quarter.

Flat growth is also seen for the iPod in the June quarter. Blount predicts that Apple will ship 9.6 million iPods in the June quarter, compared to Wall Street’s consensus of 9.8 million units.

“Going into the June quarter, we believe that Apple will continue to experience the weaker seasonality in the first half,” he said in the report.

“iPod weakness suggests channel drain for new products and potential iPod maturation,” he said. “Slowing iPod penetration suggests future products will experience more normal seasonality.”

There are also issues for Apple’s Mac computer line. “Slowing CPU sales are likely supportive of our contention that the halo effect is not as strong as perceived as well as impact of Intel transition [for Apple],” he said, referring to Apple's shift from the PowerPC processor to Intel's x86-based chips.