SAN JOSE, Calif. — Nvidia Corp. has apparently won a major design win for Apple Computer Inc.'s next-generation video iPod product line — at the expense of Broadcom Corp., according to an analyst.
Apple's current video iPod line is said to use an MP3 processor from PortalPlayer Inc. and a multimedia chip from Broadcom. The chip designs have been up for grabs for the next-generation video iPod, which has been delayed and due out in the first half of 2007.
Still, it appears that Nvidia has gained the upper hand in the next-generation and long-awaited video iPod or vPod. It is unclear if PortalPlayer has retained the socket for the next-generation vPod.
"Based on our analysis, we believe Nvidia is designed into the next-generation vPod socket at the expense of Broadcom," said Satya Chillara, an analyst with American Technology Research Inc. (Greenwich, Conn.), in a new report.
"We believe the Nvidia chip adds 3D graphics functionality in addition to all of the existing features (such as H.264) that Broadcom supported with the existing vPod," he said.
For that reason and others, the analyst has upgraded Nvidia's shares to a "buy" from a "hold" rating. "We are upgrading [Nvidia] because of 1) the next generation vPod win; 2) the G80 graphics chip is on schedule to be released in CY Q3, 3) Sony PS3 royalties will kick in during the October quarter, and finally, 4) valuation is inexpensive."
The analyst also downgraded Broadcom from a "buy" to a "hold." Broadcom "has lost the socket in the next-generation vPod to Nvidia," he said. "We view this development as negative as the vPod program contributes revenue of [about $50-to-70 million per quarter]."
Chip makers are scrambling on other iPod fronts. Just a week after PortalPlayer said its media processor silicon lost its bid for placement in Apple's next-generation iPod Nano, Samsung Electronics Co. Ltd. claimed to have won that socket.
Despite signs that Samsung was taking over the iPod chip business, struggling SigmaTel Inc. managed to hold on to its key chip design within Apple's current and new iPod Shuffle MP3 line.
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