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Amazon to buy TI's mobile chip business? Skeptics call 'BS'

October 15, 2012: 12:44 PM ET

Click the chart to track shares of Texas Instruments.

Amazon.com is in advanced negotiations to buy the mobile chip business of Texas Instruments, according to Israeli newspaper Calcalist, which would put the online retail giant on the path to becoming a manufacturer of smartphone and tablet processors.

Shares of Dallas-based TI (TXN) rose nearly 3% following the report, while shares of Amazon (AMZN) declined slightly.

Amazon's Kindle Fire tablet is currently powered by a TI processing chip, and the company has been rumored to be developing a smartphone.

But Amazon's interest in TI's mobile chip unit goes beyond smartphones, said NBG Productions chief equity analyst and portfolio manager Brian Sozzi via Twitter.

"It's about owning the supply chain to drive down costs," Sozzi tweeted.

However, the report generated a healthy dose of skepticism among users of Stocktwits.

firstadopter: The Israeli newspaper says $AMZN may pay "billions" for $TXN OMAP business. A billions # makes NO SENSE b/c AMZN is primary OMAP customer.

Plus, it could be a challenge for Amazon to hold on to TI's other clients, including Barnes & Noble (BKS), which uses TI processors in its Nook tablet, and Motorola, which powers a number of its smartphone with TI processors. However, the company, which is a subsidiary of Google (GOOG), features the Qualcomm Snapdragon processor in its new Motorola Droid Razr M.

MichaelComeau: I am calling BS on $AMZN for $TXN chip biz rumor. $TXN OMAP is used in $BKS & Motorola products. They will NEVER buy chips from Amazon.

bgfalcon91: If $AMZN buys the $TXN mobile chip div., it appears they will need to issue debt or equity. With purchase of buildings, cash is about $4b.

It's also worth noting that TI's mobile chip business isn't even profitable. During the second quarter, the company posted a net loss of $51 million for the division, as revenue dropped nearly 40%.

Nils1975: RT @JonasWagner2010 $AMZN in talks to buy $TXN mobile chip arm: paper -->prob BS, i'd be inclined to buy $NVDA, if drops ~3% on this article.

Following the report, shares of rivals Nvidia (NVDA) and Intel (INTC) were up slightly, while Qualcomm (QCOM) edged lower.

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Hibah Yousuf
Hibah Yousuf
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Hibah Yousuf is a reporter at CNNMoney, where she covers stocks, bonds, commodities and currencies trading across the globe, as well as corporate earnings and other markets-related news. Prior to joining the site in 2009, she interned at Money Magazine.

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