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Samsung 'gaffe' sends Apple order to rival chip maker

Analyst allegations

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Music chip maker SigmaTel is reported to have won the contract to supply Apple with audio controllers for the second-generation iPod Shuffle because Samsung went public on the Mac maker's iPod Nano plans.

The claim comes from Los Angeles-based Wedbush Morgan Securities analyst Craig Berger, according to a variety of reports today. Berger told clients he believed Samsung's design win for the chip that will power the next version of the Nano would have been extended to an updated Shuffle had a Samsung executive not spilled the beans about the new Nano ahead of time.

“We have increased confidence that SigmaTel will continue supplying the MP3 processor into the Apple Shuffle in H2 06, after a Samsung executive commented publicly that Samsung supplanted PortalPlayer in the next-generation iPod Nano,” Berger told investors.

“It is not surprising that Apple would ‘punish’ Samsung for commenting publicly about its position within the iPod Nano follow-on, and we believe that SigmaTel is likely to be the resulting beneficiary of the Samsung executive’s gaffe,” he said.

In April 2006, the head of technical marketing at the US division of Samsung's chip making arm, Jon Kang, told reporters: "I knew PortalPlayer would take a dive... I knew that we would win this design. We’ve been working with Apple a long time. It’s a huge win for us."

Berger said he reckons SigmaTel will ship 7.4m Shuffle chips of one type or another this year - handy when the company faces stiff competition in the sector. If NAND Flash prices continue to fall, Apple may cut Shuffle prices, he suggested. If so, that may boost demand for the iPod, in turn increasing SigmaTel's shipments. ®

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