Yesterday Samsung announced it was awarded a huge contract from Apple Computers winning the bid to make chips for Apple's next generation of iPods.

Sr. VP for technical marketing at Samsung Semiconductor Inc Jon Kang was so confident in his company's new chip design he called the 32-bit ARM processor "PortalPlayer Killer". The chip's nickname may well prove prophetic.

PortalPlayer, a San Jose based processor manufacturer announced last week that the follow up to its PP5021 processor design will not be selected by Apple Computers for its new iPods. This is a crippling blow to PortalPlayer with sales to Apple accounting for some 90% of its business.

PortalPlayer produced a follow up to its PP5021 design, the PP5024 is a 130-nm chip for a low-power flash platform. The PP5024 was intended to go into the next generation iPod's, or so PortalPlayer thought. News from PortalPlayer last week came as something of a shocker for industry analysts. The San Jose chip manufacturer's growth was gaining momentum fueled by its contract with Apple to produce chips for MP3 players. In 2005 PortalPlayer watched its revenue grow from 57.9 million in Q3 to 78.2 million in Q4. Not surprising to industry analysts is that the San Jose chip maker's stock has been in been dropping since its announcement.

Samsung is seriously kicking butt in the consumer electronics industry. With new TVs on the way and all sorts of new technologies to improve the successful Samsung DLP line it seems Samsung can do no wrong. The Korean electronics firm set record profits in 2004 / 2005.

Since Samsung is a developer of the technology that goes inside the iPod, I wonder if this will influence the Samsung YP line of MP3 players? Samsung's YP line are just another in a crowded market space of would-be "iPod Killers".