A UK chip design team specialising in powerful multimedia processors has won a new client - Apple.

The team from Alphamosaic (now owned by processor giant, Broadcom) has been contracted to produce processors capable of handling video, images and music. These are described as being "for a future multimedia mobile device".

The chip is called the VC02, and is described as: "The world's most advanced mobile multimedia processor."

The processor can display video on 3.5-inch color LCD screens, and in conjunction with a CCD (charge coupled device) can capture up to 8-megapixel images.

News of the deal has sparked a furore of speculation that Apple may intend delivering a brand-new video iPod product, but other industry watchers have warned such technologies could also be employed in a revised iSight camera.

The new processors could be in mass production by the end of 2005.