The EETimes reports that PortalPlayer which was recently dumped from the iPod nano in April of this year has received the contract to design the processor for the rumoured iPhone.

Late last month it was announced that nVidia would acquire PortalPlayer for $357 million, it is also believed that nVidia could be providing a graphic processor for the upcoming true video iPod.

Rumours of the Apple iPhone continue to mount, with reports emerging last week that Foxconn has secured the contract to manufacture 12 million units.