Amazon Reported Eyeing Texas Instruments' Mobile-Chip Business
By Barry Levine / Mobile Tech Today. Updated October 15, 2012.
Amazon is negotiating to buy Texas Instruments' mobile-chipmaking business. That's the word from a report in an Israeli publication -- which, if true, could point to an increased interest by the huge virtual retailer in making its own hardware.
The report ran Monday in the Israeli financial newspaper Calcalist. The reporter, Assaf Gilad, had accurately reported that Apple was interested in buying an Israeli flash storage company, Anobit, which the technology giant subsequently did.
'Verticalization of the Industry'
Last month, TI had said it was cutting back on its investment in the OMAP system-on-a-chip, a product the company had developed that is used in smartphones and such tablets as Amazon's Kindle Fire.
Amazon's purchase of the TI unit could run into the billions of dollars, but it would provide more control over the OMAP chip used in its tablet -- and potentially give it more control over the direction of other hardware it might develop, such as smartphones.
We asked Avi Greengart, an analyst with industry research firm Current Analysis, what the impact of such a purchase might be.
He pointed to the increasing "verticalization of the industry," such as Apple's decisions to take more control over the design and making of the chips in its devices and Samsung's design and manufacture of its own chips and devices. Apple designs most of its mobile processors and Samsung manufactures them, although there are indications that Apple is moving to find another manufacturer.
If Amazon does buy the TI unit, Greengart said, Amazon would similarly have the ability to "ramp up the speed of the chip," or, as Apple did for the chip used in its most recent Retina display, make improvements in graphics performance.
He also pointed out that, by having its own chipmaker, Amazon can more readily tweak the trade-off between battery life and performance.
Attention, Barnes & Noble
Ross Rubin, principal analyst for Reticle Research, noted that "there has been a lot of speculation about whether Amazon would enter the smartphone market" following its tablet and e-reader successes, and this move suggests it might.
While it is not necessary that Amazon buy a chipmaker to make a smartphone, Rubin said, the control over processors makes development of other devices more feasible. This could not only manifest itself in such issues as battery life, he said, but could allow Amazon to emphasize, for instance, video -- and thus promote subscriptions in its Prime program.
If Amazon does this deal, Greengart said, "it would most certainly signify that it's more seriously interested in hardware than people had imagined."
One company that is likely to be following these reports very closely is Amazon's main tablet competitor, Barnes & Noble, whose Nook tablet uses TI chips. But Greengart pointed out that it would be a "ridiculous reason" for Amazon to buy the chipmaker primarily to make life harder for Barnes & Noble, which could simply find another supplier.