Online retail giant Amazon may be on its way to becoming a manufacturer of processors for smartphones and tablet computers, Calcalist has learned through the company’s first publication on global press.
Currently Amazon is in advanced negotiations with TI for the acquisition of its mobile IC activity. If negotiations lead to an agreement, Amazon may become a rival to some of the mobile industry’s heavyweights, such as Qualcomm, Samsung, Intel, Nvidia and Apple. Such a deal will likely be valued in billions of dollars.
TI announced earlier this month that it was seeking to sell its mobile phone and tablet processor unit, causing more than a few market analysts to raise an eyebrow, particularly after the company had begun providing Amazon with processors for its Kindle Fire HD tablet. Amazon is considered a major client of TI and now it turns out that it wants to assimilate TI’s IC activity.
Book wholesaler Barnes & Noble, Amazon’s archrival, is also a TI client and integrates its boards in its own media tablet named Nook. Amazon’s move will leverage its standing against Barnes & Noble. Nonetheless, TI announced that it would continue to support Barnes & Noble as its client.
TI reached the conclusion that after years of activity in the mobile IC market, it could not carve out a significant market share, such as Qualcomm did with the Snapdragon, Nvidia did with the Tegra and Samsung did with a host of chips it manufactures for itself and for Apple.
TI Spokesperson Whitney Jodry told Calcalist that the company was going through a “quiet phase” right now ahead of the release of its reports to the stock exchange, and that as a matter of policy, the company refrains from commenting on rumors.
However, she did comment on TI’s plans that were already publicized saying that as the company had previously announced, the smartphone market has become less attractive to TI in the long run and that the company was currently readjusting its investments.
Jodry said that TI did not intend on selling its OMAP mobile IC division lock, stock and barrel, but only its smartphone chip activity. The company will continue to develop and conduct IC activity for other products such as chips for the automobile industry. Jodry added that even without the smartphones, the company had 4,000 clients that accounted for $400 million of its annual revenues.
According to estimates by ISI, TI has 10 clients from the mobile industry that account for $900 million of its annual revenues. TI’s overall revenue for 2011 was $13.7 billion.
Such a step marks the end of a rich history in the industry which reached its pinnacle when TI provided processors to Nokia’s mobile phones when the Finnish giant was at its prime in the middle of the previous decade. TI’s mobile activity waned with the descent in Nokia’s activity.
Alongside a host of smaller players from China and Taiwan, Intel is also attempting to make its debut in the mobile market with its Atom series processor based on x86 technology. Nonetheless, TI insists that it is not the mounting competition in the mobile processor market that led it to the decision.
This report was originally published in Hebrew