There are numerous news reports on Monday that Amazon.com is in discussions to acquire the mobile chip unit of Texas Instruments (News - Alert), which could be valued in the billions of dollars.
Amazon.com wants to acquire the chip unit to “exert more control over the chips running its Kindle Fire tablets and the accompanying smartphones it probably has in the works,” according to The Next Web.
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The Reuters (News - Alert) News Agency also speculates that if the division is sold to Amazon it would become a competitor to Apple (News - Alert) and Samsung – both of which manufacture chips.
Amazon already manufactures tablet computers and may soon start offering smartphones, as well. Texas Instruments’ chips are already used in the Kindle Fire tablet and Barnes & Nobles’ Nooks.
The sector is competitive. Last month, it was reported that Amazon dropped the price of the Kindle Fire to “an impossibly low $159” – making it more competitive with products from rivals.
It appears that Texas Instruments wants to focus more on providing products to industry, such as the auto sector, because it is more “profitable and stable”.
Texas Instruments saw $342 million in revenue in the wireless processor unit during Q2. The wireless unit provides baseband products, open multimedia applications platform (OMAP) processors, and wireless-connectivity chips. The wireless unit saw a loss of $51 million during Q2.
There is also speculation that Amazon may want to own the chip business for other reasons than just to use them in their own smartphones. They could be used in other products. In addition, “it’s about owning the supply chain to drive down costs,” Brian Sozzi, an industry analyst, was quoted saying.
Intel (News - Alert), Nvidia and Qualcomm are among Texas Instruments’ rivals in the chip sector. Neither Amazon nor Texas Instruments wished to comment on the news reports as of Monday morning.
Edited by Brooke Neuman