Media chip designer Trident Microsystems (Nasdaq: TRID) is a well-known work in progress -- a rampant revenue growth story shackled by some of the worst margins in the business. It's downright scary at a first glance, and both analysts and investors are staying away from the stock.

But things are changing quickly for Trident. The business model simply runs much smoother when given a larger slab of sales to work with, and a fresh market report by chip researchers iSuppli says that there's lots of business coming Trident's way.

iSuppli says that Trident has regained the top ranking in the worldwide market for TV-bound video-processing chips, a spot it hasn't held since 2007. For those keeping score at home, those were the days when Trident routinely commanded gross margins above 45% and generated stable earnings and cash flows -- and the stock was worth about 10 times what it is today. A return to that state of affairs should be very welcome to Trident shareholders.

According to iSuppli, Trident holds a 13.5% share of the TV chip market, which also happens to be booming because of huge demand for high-definition features, big-screen display drivers, and the general rise of digital broadcast formats. If 13.5% seems like small potatoes, consider that the top six suppliers combined have only a 42.7% share. Broadcom (Nasdaq: BRCM), Zoran (Nasdaq: ZRAN), and STMicroelectronics (NYSE: STM) all qualify for that list despite owning less than 4% of the market each. Electronics manufacturers including Sony (NYSE: SNE), Panasonic (NYSE: PC), and Samsung started ramping up their internal chip-design efforts a couple of years ago, squeezing specialists out of the market. That was the beginning of Trident's downfall, and the trends are reversing again.

Zoran is the leading chip supplier for the American TV market -- at least for the moment -- while MStar Semiconductor holds sway over China. As you can see, the opportunity to grow this market is huge, and iSuppli says that the market itself is expanding by 30% a year.

Fed by healthier sales and tight cost controls, Trident edged closer to breaking free of the red ink in the quarter ended in September and is on a path to becoming profitable in coming quarters. The only analyst to offer estimates on this stock, according to Yahoo! Finance, doesn't seem to have updated his earnings targets for a while, but the trend looks crystal clear to me.

If Trident can keep its eye on the ball and keep improving its margins as chip sales continue to grow, this could be a multibagger in 2011. I'm placing an outperform call on this five-star Motley Fool CAPS stock right now -- feel free to join me.