Apple's long-term iPod chip supplier PortalPlayer is down, but not out, reports claim. The company remains in the running for use in a future video iPod product.

The company - which announced that its ARM-based chips will no longer be used in Apple's iPod nano products - is competing with Broadcom and Samsung to secure the deal to supply processors for Apple's forthcoming video iPod, claims EE Times.

Wedbush Morgan Securities analyst Craig Berger believes PortalPlayer will win the contract.

Samsung recently revealed it had taken the chip supply contract for iPod nanos from PortalPlayer, but the latter firm has sworn it won't give up on Apple, which accounts for an estimated 80 per cent of its business.

PortalPlayer president and CEO Gary Johnson vowed: "We haven't given up with Apple. We will fight back to win that deal." He said Apple had taken its decision in response to a "plethora" of complex issues.

Broadcom provides the video co-processor in Apple's current iPod with video, while PortalPlayer's PP5024 chip supports the audio decoder and control functions.

Commenting on Apple's decision for the much-discussed video iPod, Johnson said: "We don't want to tip the customer's hand".

Analysts are split, with some anticipating the relationship between Samsung and Apple will grow stronger, while others expect Broadcom, PortalPlayer, or both firms will secure the contract to supply processors for the future iPod video.