Wolfson sales on track as it plays down iPod blow

WOLFSON Microelectronics has received a minor set-back after its components were left out of a new Apple iPod model.

The semiconductor maker, spun out of Edinburgh University, has grown into one of Scotland's leading technology companies after winning a raft of contracts to supply chips for the likes of the XBox games console and Sony's PSP unit.

But Apple remains its largest customer, accounting for 20 per cent of total sales with its audio chips in almost all of the millions of iPods in use worldwide.

This week photographs have been posted of a disassembled iPod Classic, revealing it has no Wolfson audio chip, using chips from American rival Cirrus Logic.

Analysts were divided over the significance of Wolfson's omission from the iPod Classic, a revamped version of the old format with up to 160Gb of memory. While they acknowledged it was unlikely to be one of Wolfson's major sellers, Apple's dual sourcing strategy could reduce the firm's sales or cut margins moving forward.

Dan Ridsdale at Landsbanki said the iPod classic appeared to be "a last hoorah" for the old format, and Wolfson had lost out to a cheaper Cirrus product as Apple attempted to maximise margins. The bigger-selling Apple products in the future - the iPhone and a new touch screen iPod - both have Wolfson chips.

Ridsdale said: "They would rather be in it [the iPod classic] than not, and it does show that they can't take their position with Apple for granted."

A spokesman for Wolfson said the firm was unable to comment on the actions of Apple. However, it is understood it has no plans to downgrade its sales expectations, expected to be a record $63-$68 million (31m-33.4m). Wolfson's shares have more than halved in value since a year ago, after a worldwide slowdown in the sale of consumer products.