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.
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.
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.
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%.
Not a member yet?Sign up now for a free account
|The Obamacare tax penalty isn't dead yet|
|Anjali Sud was rejected from dozens of investment banks. Now she's the CEO of Vimeo|
|Judge throws out United Airlines lawsuit against 22-year-old|
|Wells Fargo timeline: Bank's 20-month nightmare|
|Hulu's been a breakout success. It also lost $920 million last year|