According to a
recent analyst's quote, Apple will be using chips from an Austin, TX based semiconductor company called SigmaTel in an upcoming version of a music player. The analyst, Jason Pflaum of Thomas Weisel Partners LLC, cited "numerous sources in Asia" and predicts SigmaTel will receive $2-4 million from the deal in the first full quarter.
It must be noted that Thomas Weisel has an investment banking relationship with SigmaTel and that neither the semiconductor company nor Apple has confirmed this deal.
If true, it could mean a cheaper, lighter, skip-proof iPod.
Edit: The SigmaTel web site says that they make USB controller chips, MP3 audio decoders, and audio codecs, not flash storage. This has now been pointed out a few times later in this thread. This Edit has been added so we won't have an endless stream of new posts making this same point.