Samsung Electronic announced that it grabbed a major MP3 chip design win at Apple Computer. The runner-up was Portal Player Inc.

Last week, Portal Player announced that Apple decided not to continue the use of their chips and decided to look for another supplier. The speculation last week was that Samsung, SigmaTel, Actions, and LSI Logic were chief among the chip makers vying for the iPod socket, according to an analyst.

At the SEMI Strategic Business Conference on Wednesday, Samsung disclosed that it won the iPod business. “I knew PortalPlayer would take a dive,�? said Jon Kang, senior vice president for the technical marketing group at Samsung Semiconductor Inc., the U.S. chip arm of South Korea’s Samsung. “I knew that we would win this design.”

PortalPlayer, which supplies the media processor for Apple’s MP3 lines, saw its stock fall off a cliff following the announcement. Apple represented 90% of PortalPlayer’s revenue and the future of the company is now uncertain. PortalPlayer chips have been used in the iPod since day one, but the company’s latest PP5021 System-on-Chip (SoC) was stepped over. So they are kind of out of business.

Samsung will now not only provide NAND flash memory chips for the portable audio players, but it will also provide the media processor as well. The 32-bit ARM chip will mark Samsung’s biggest large-scale integration (LSI) chip order. The future looks bright for Samsung.

Some win, some lose, that’s the market. Always changing.