Nvidia buys iPod chip supplier

Nvidia is buying PortalPlayer, Apple's supplier of the MP3 decoder and controller chip that goes inside your iPod. Well, the hard disk models, at any rate - other iPods use different companies' chips.

Founded in 1999, PortalPlayer also supplies silicon for Sandisk media players, and counts Bang & Olufsen, Philips and Samsung as customers.

The headline price for the Silicon Valley semiconductor firm is $357m, but the real price Nvidia is paying is the $161 million net of cash on PortalPlayer's balance sheet as of September 30, 2006.

This suggests that PortalPlayer is better at winning customers than making money out of them. In its most recent quarter, the firm posted revenue of $34.8m, compared with $57.9m for the same Q last year. Profits were a measly $1.5m.

Nvidia aims to combine PortalPlayer's applications processors with its own handheld GPUs to feed the next generation of portable media players, PDAs, games handhelds and phones.

Jen-Hsun Huang, Nvidia's boss, stakes out the company's claim for this ground: "We intend to drive the next digital revolution, where the mobile device becomes our most personal computer," he said today. ®

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