PortalPlayer, the supplier of chips used in the hard-drive based-iPod, is about to do battle with SigmaTel, the supplier of MP3 audio chips for flash-based players from Creative Technologies, Dell and Samsung – and now the iPod shuffle.

Until now the two companies controlled their own market segments, but PortalPlayer has unveiled its first chips for flash-based players, and SigmaTel has revealed plans to introduce chips for hard-disk players later this year.

iSuppli analyst Shyam Nagrani told Electronic Business: "Both companies are aiming at each others' markets. They had to, because that's the only way they could grow."

Number crunching

According to iSuppli estimates, PortalPlayer chips are used in 80 per cent of hard-disk MP3 players and SigmaTel chips are used in 70 per cent of flash players.

Thanks to its recent deal to equip Apple's iPod shuffle, SigmaTel has seen 26 per cent sales growth in 2005's first quarter, says iSuppli.