Wanna Invest In the iPod? Stick with Nvidia, one analyst says

Arik Hesseldahl

Here's still more fuel to the fire on the speculation of a video iPod and iPhone. An interesting research note crossed my desk this morning from FBR Research analyst Chris Caso concerning graphics chipmaker Nvidia and PortalPlayer, one of the main chip suppliers on the iPod.

Caso says he thinks Nvidia has landed one of its chips in the upcoming video iPod and that PortalPlayer has been designed out of it. But a PortalPlayer application chip has been designed into the iPhone. Either way its a win for Nvidia, which is in the process of acquiring PortalPlayer for $357 million."

One loser, Caso says, is Broadcom, which you'll remember, provided the video chip in the first generation of video-ready iPods. All this new iPod business for Nvidia, Caso says, will add $100 million in incremental revenue in 2007 once the deal to acquire PortalPlayer closes, plus another $30 million in business from non-Apple MP3 players.

On the iPhone he says "We believe Apple selected PortalPlayer so as to provide all of the functionality of an iPod with little software rework." He further says he expects Apple to move 22 million of the phones in 2007, which will have a revenue impact of $150 million on Nvidia.

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