Apple iPod shuffle flash chip supplier, SigmaTel, has acquired significant assets from Rio Audio.

In a statement, D&M Holdings confirmed itself to have: "Signed an agreement to sell certain intellectual property and other technology assets of the Rio MP3 player business to SigmaTel".

Financial terms have not been revealed.

SigmaTel will hire most of Rio's technical development personnel. However, Rio will be able to continue making products, D&M Holdings said.

"Rio retains full access to its MP3 technology that it has agreed to sell to SigmaTel via a no-fee, grant-back license conditioned on its use of the SigmaTel platform in MP3 products."

Apple success costs lives

In the fourth quarter of 2003, Rio held second place in the music player market with 10.13 per cent. Apple then held 26.98 per cent of that market, according to NPD TechWorld.

D&M Holdings owns the Denon, Marantz, McIntosh Laboratory and the D&M Professional, ReplayTV, Rio and Escient brands.

SigmaTel's technologies are found in a wide range of music players. It also supplies technologies for hard-drive designs by Rio, including the Rio Carbon and Nitrus, and also by GoVideo, Creative and Memorex.

"Engineers from Rio and SigmaTel have worked together for years improving MP3 software and creating great value for the consumer," said Vic Pacor, president of D&M Holdings.

"We are transferring the Rio technical and engineering resources to SigmaTel, where they can be better leveraged through SigmaTel's considerably larger scale in the MP3 business," he said.

"We received an attractive offer for the Rio assets that we are selling, and we have secured access to enabling technology for the MP3 category of products without carrying the full cost of the technology," Pacor said.

In May, D&M Holdings said it was examining strategic options to, "reduce the effect Rio's losses had on the company".

The company confirmed itself to be, "currently examining additional strategic options for Rio".