Sam Oliver
Amazon is reportedly looking to bolster its mobile device division by purchasing the smartphone chip division of Texas Instruments.
The online retailer's apparent pursuit of the TI mobile chip division has prompted speculation that Amazon plans to build its own smartphone and compete with Apple's iPhone, according to Reuters. The two companies already compete in the tablet market, with Amazon's Kindle Fire taking on the iPad.
If Amazon were to purchase TI's smartphone chip business, the deal is likely to be worth billions of dollars. The rumored deal is seen as a strategic move that would allow Amazon to better compete with Apple and Samsung, two rivals that already design their own mobile chips for tablets and smartphones.
Amazon already utilizes TI's chips in its Kindle Fire lineup, and Amazon Chief Executive Jeff Bezos also touted the performance of TI's components at a recent media event. And TI has indicated it plans to exit the wireless business in an effort to grow profits.
A potential buyout of TI would be of particular interest to Apple because its chips are found in many of the company's devices, including the new iPhone 5 and the latest iPod touch. TI provides the touchscreen controlling system on a chip for both newly released devices.
Last month, it was also said that Apple was actively courting employees from TI to bolster its own chip development. The A6 processor found in the iPhone 5 is the first custom ARM processor designed entirely in-house by Apple.
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62 Comments
This get's very interesting. Your move Tim. Amazon's stock will be interesting to watch after this rumor.
This get's very interesting. Your move Tim. Amazon's stock will be interesting to watch after this rumor.
What do you suggest?
[quote name="digitalclips" url="/t/153384/amazon-reportedly-in-talks-to-buy-tis-mobile-chip-division#post_2211702"]This get's very interesting. Your move Tim. Amazon's stock will be interesting to watch after this rumor.[/quote] Well their stock is down so far this morning.
Buying TI's mobile chip division for billions of dollars would make Amazon a money loser. Last quarter, Amazon only made $7 million in profit. Amazon lives in the slim profit world and loves living there. Yet, it costs hundreds of millions to billions of dollars to keep churning out new chips each year. For example, Apple spent about $0.5 Billion to create the A6. And it will spend another amount to create the A7. And so on. Since Apple is in the high profit margin world, it can afford to pay for the design of its own chips. Amazon does not.
Microsoft will make its own ARM chip optimized for Windows for Surface devices within a couple of years.