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Last night, PortalPlayer Inc. (NASDAQ:PLAY) acknowledged that Apple Computer Inc. (NASDAQ:AAPL) would not be using its media processor chip for future advanced iPod lines.

According to PortalPlayer, which generates over 90 percent of its sales from Apple's iPod, its next-generation chip has not been selected by Apple for use in its new mid-range and high-end flash-based iPods. EETimes reports:

It is unclear which vendor took the design win at Apple... PortalPlayer is expected to see its bottom line suffer as a result of the bad news. The company is developing and selling chips for non-MP3 applications, but it has yet to make a dent in the arena.

Reg Hardware adds:

PortalPlayer chips are currently used in the iPod Nano and the hard disk drive-based iPod. The iPod Shuffle uses a Sigmatel chip....

With a HDD-equipped video-oriented iPod believed to be in the works, Apple may well have decided that it's time to base the music-centric models on Flash.... But there's another, more radical possibility. If Apple is indeed preparing a product that combines an iPod with a mobile phone, it will almost certainly use Flash for storage and would undoubtedly be a high-end offering.

Did Sigmatel Inc. (SGTL) land the big design win?

PLAY 1-yr chart:

Related:

PortalPlayer’s Preface Chipset Gaining Recognition, As Company Diversifies Beyond Apple

Source: PortalPlayer Losing Its Mainstay iPod Business -- Did Sigmatel Grab It? (PLAY, AAPL, SGTL)