Apple's choices include the use of PortalPlayer Inc.'s 5021C system-on-chip (SoC) for audio processing and Cypress Semiconductor Corp.'s CY8C21434 for the circuitry behind the iPod nano's trademark Click Wheel interface, according to iSuppli (El Segundo, Calif.). These and other ICs account for 77 percent of the $90.18 total bill-of-materials (BOM) cost for the 2-gigabyte version of the iPod nano, the firm said.

iSuppli was particularly surprised by the selection of the PortalPlayer part, given SigmaTel Inc.'s previous dominance of the flash-memory-based MP3 player segment. PortalPlayer previously supplied audio processors only for hard-disk-drive-based MP3 players, iSuppli sad, adding that the PortalPlayer 5021C is not a standard part and likely is an Apple-specific derivative of the company's 5020 chip.

iSuppli said the use of the Cypress chip confirms a rumor that Apple was abandoning Synaptics Inc. in favor of its own proprietary solution based on the Cypress part.

The full report on the iPod nano is available from iSuppli's Teardown Analysis service for $499. It includes a complete BOM, cost data, photos and descriptions of key components. A similar analysis also is available for the iPod shuffle, according to iSuppli.