ATI Technologies, Apple’s current supplier of acceleration chips, may lose its lucrative contract to Nvidia, according to Bloomberg.com.

Nvidia last week denied that it‘s engaged in organizing an OEM agreement with Apple. Bloomberg quotes analyst David Hodgson, who said an Nvidia contract with Apple would be "small but significant, and Nvidia is looking for markets it can break into easily".

The loss of the Apple contract could cause major damage to ATI, according to industry analysts. ATI has seen a major slide in its stock values over the last year. Nvidia recently won a contract from Compaq, which hit ATI’s share value.

ATI has kept quiet about how much of its $1.23 billion turnover comes from its agreement with Apple. ATI says the company expects Apple to award contracts that will take effect in January, 2001, soon. These contracts are usually signed a few months in advance, but sources say the possibility exists of a major announcement by Apple at Macworld Expo, New York next week.