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Tuesday, July 18, 2006, 03:00 pm PT (06:00 pm ET)

Nvidia to help power next-gen video iPod

Graphics chip maker Nvidia Corp. has beat out Broadcom Corp. in a major design win for Apple Computer's next-generation video iPod product line, according to one Wall Street analyst.

"Based on our analysis, we believe Nvidia is designed into the next-generation video iPod socket at the expense of Broadcom," American Technology Research analyst Satya Chillara told clients on Tuesday.

The video capabilities of Apple's current fifth-generation iPods are made possible by a chip from Broadcom.

"We believe the Nvidia chip adds 3D graphics functionality in addition to all of the existing features that Broadcom supported with the existing video iPod," Chillara added.

As a result of his findings, the analyst upgraded shares of Nvidia to "Buy" from "Hold" while downgrading shares of Broadcom to "Hold" from "Buy."

"We view this development as negative" for Broadcom, Chillara said, explaining that Apple's fifth-generation iPods have contributed between $50 and $70 million in revenue for the company each quarter.

Apple's decision to adopt Nvidia chips in the next video iPod represents the second major iPod component supplier swap in recent months:

In April, it was reported that Samsung beat out PortalPlayer as the system-on-a-chip (SoC) supplier for the second-generation iPod nano.