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."

News source: EETimes.com