Just a week after PortalPlayer Inc. said its media processor silicon lost its bid for placement in Apple's next-generation iPod Nano, Samsung claimed to have won that socket. But that does not make the South Korean chip giant a shoo-in for the next-generation iPod with Video product line.

Jon Kang, senior vice president for the technical-marketing group at Samsung Semiconductor Inc. (San Jose, Calif.), revealed the design win during a presentation at the SEMI Strategic Business Conference here last week.

PortalPlayer, which supplied the MP3 media processor for the current iPod Nano, mushroomed to $225 million in sales last year almost solely on its business with Apple. But the fabless semiconductor vendor two weeks ago confirmed it had lost the next-generation Nano business. Analysts said last week that Apple was looking for a vendor that can offer integrated audio/video so it can go with one vendor across iPod lines, especially as video migrates to cheaper products over time.

A spokesman for Apple Computer Inc. (Cupertino, Calif.) declined to comment or elaborate on design wins for the iPod.

Nonetheless, Samsung's Kang was ebullient as he told EE Times the company's media processor would go into the "next-generation iPod" at the expense of PortalPlayer. "We've been working with Apple a long time [as a flash memory supplier]. It's a huge win for us," he said.

Kang said the iPod slot represents Samsung's largest LSI (nonmemory) chip order to date. Samsung is the largest supplier of NAND flash to Apple, Kang said.

"It would appear that Samsung has done a package deal, bundling their NAND flash together with their processor," said analyst Chris Caso with Friedman, Billings, Ramsey and Co. (Arlington, Va.). The specific name of the processor remained unclear as of press time. But Samsung already has a media processor design win in the iRiver U10 player. David Carey, whose company, Portelligent, just did a teardown of that system, said the Samsung multichip package (SA5B450X03) inside the U10 contained three chips: 1 Mbyte of SST NOR flash, a Wolfson audio codec and a Samsung ARM-based processor, the S5L8450B01. Since the PortalPlayer processor is also ARM-based, Apple would gain code portability if this were the device it chose.

Without a doubt, the stakes are high for chip vendors. The iPod Nano represents about 70 percent of Apple's iPod revenue, analysts estimate. According to Craig Berger, vice president of research at Wedbush Morgan Securities, for the month of March Apple's iPod lineup pulled in total revenue of $1.714 billion on 8,526 units with an average selling price of $201. Apple was clearly the dominant supplier of MP3 players last year, with 65 percent market share, according to Gartner Inc.

At the same time, the deal with Apple forces Samsung to walk a fine line in the MP3 market, in which the company could be seen as competing with its customers. Samsung not only sells chips into its own MP3 players, but it now also provides semiconductors for competing products.

Supposedly, Samsung's MP3 and semiconductor units are separate and independent. But the company's move to expand its semiconductor ties to Apple raises questions about the competitiveness of Samsung's own MP3 business unit.

Interestingly, that MP3 group has complained publicly that Samsung's semiconductor operation favors Apple at the expense of its own sister division in NAND flash. Last year, the Korean press carried stories quoting managers from Samsung's MP3 player operation claiming they were being short-changed by the massive discounts on NAND flash chips that Samsung was providing to Apple. It has been alleged that Samsung is supplying its flash memory chips to Apple at half their market value, in hopes of monopolizing the account.