Amazon reportedly in talks to buy TI's mobile chip division

Posted:
in General Discussion edited January 2014
Amazon is reportedly looking to bolster its mobile device division by purchasing the smartphone chip division of Texas Instruments.

The online retailer's apparent pursuit of the TI mobile chip division has prompted speculation that Amazon plans to build its own smartphone and compete with Apple's iPhone, according to Reuters. The two companies already compete in the tablet market, with Amazon's Kindle Fire taking on the iPad.

If Amazon were to purchase TI's smartphone chip business, the deal is likely to be worth billions of dollars. The rumored deal is seen as a strategic move that would allow Amazon to better compete with Apple and Samsung, two rivals that already design their own mobile chips for tablets and smartphones.

Amazon already utilizes TI's chips in its Kindle Fire lineup, and Amazon Chief Executive Jeff Bezos also touted the performance of TI's components at a recent media event. And TI has indicated it plans to exit the wireless business in an effort to grow profits.

Apple's A-series chips


A potential buyout of TI would be of particular interest to Apple because its chips are found in many of the company's devices, including the new iPhone 5 and the latest iPod touch. TI provides the touchscreen controlling system on a chip for both newly released devices.

Last month, it was also said that Apple was actively courting employees from TI to bolster its own chip development. The A6 processor found in the iPhone 5 is the first custom ARM processor designed entirely in-house by Apple.
«134

Comments

  • Reply 1 of 62
    MacProMacPro Posts: 19,383member
    This get's very interesting. Your move Tim. Amazon's stock will be interesting to watch after this rumor.
  • Reply 2 of 62

    Quote:

    Originally Posted by digitalclips View Post



    This get's very interesting. Your move Tim. Amazon's stock will be interesting to watch after this rumor.




    What do you suggest?

  • Reply 3 of 62
    rogifanrogifan Posts: 10,669member
    This get's very interesting. Your move Tim. Amazon's stock will be interesting to watch after this rumor.
    Well their stock is down so far this morning.
  • Reply 4 of 62
    Buying TI's mobile chip division for billions of dollars would make Amazon a money loser.

    Last quarter, Amazon only made $7 million in profit. Amazon lives in the slim profit world and loves living there.

    Yet, it costs hundreds of millions to billions of dollars to keep churning out new chips each year. For example, Apple spent about $0.5 Billion to create the A6. And it will spend another amount to create the A7. And so on.

    Since Apple is in the high profit margin world, it can afford to pay for the design of its own chips.

    Amazon does not.
  • Reply 5 of 62
    Microsoft will make its own ARM chip optimized for Windows for Surface devices within a couple of years.
  • Reply 6 of 62


    Originally Posted by eastofeastside View Post

    Microsoft will make its own ARM chip optimized for Windows for Surface devices within a couple of years.




    You said that before (despite only appearing to have one post), but there's no evidence of it at all.

  • Reply 7 of 62
    I don't see ti being of much use to amazon in the near term. It's hard to imagine them entering into the worlds most capital intensive business with 0 manufacturing experience and very little mobile device experience. It may make sense a few years down the line if amazon makes some major progress in mobile devices but that is a huge if. Deja vu of hp buying palm all over again
  • Reply 8 of 62
    I'm waiting for Google to buy a chip business. Because that's the natural progression from search engines.
  • Reply 9 of 62
    That would seem like a very odd move, even if they made the purchase for pennies on the dollar. Amazon doesn't buy enough chips to make it justifiable at current levels; even HTC buys more processors than Amazon. The ongoing development costs are also very high, which makes it hard to imagine why another customer would purchase chips from them. The chips do have a pretty good margin in quantity, but that is only around $6/unit.
  • Reply 10 of 62

    Quote:

    Originally Posted by eastofeastside View Post



    Microsoft will make its own ARM chip optimized for Windows for Surface devices within a couple of years.


    They must hurry because they haven't started yet, Microsoft doesn't own an ARM architectural licence. 

  • Reply 11 of 62

    This is really really interesting.  In the 90's and early 2000's the accepted mantra was for software OS, software apps, hardware, etc. to be separately developed, sold, and then integrated by hardware OEMs.  Apple bucked this trend and as performance currently drives the most interesting mobility [and perhaps smallest laptops, Air?], where power, weight, display, etc. performance is most demanding [including manufacturing].  As observed by Clay Christensen and observed by Horace Dedui, in this situation integration is needed to be competitive but more importantly to meet unsatisfied customer jobs to be done.  Apple has brought into house what it considers key software and hardware technologies, SAMSUNG has the hardware technologies and is trying to bring into its "platform software and eco-systems.  Amazon has ecosystems, has forked Android [so kind has the SW], but hardware is needed to get the integration complete.


     


    As observed with IBM, DEC, Prime, etc., eventually, the products become good enough and modular assembly aka 90's PCs returns as right business model.  So are SAMSUNG and Amazon getting on board early or is the pace of smartphone and perhaps tablet technology moving so fast that we will be back to modular by the time they get their act together and they get disrupted by Lenovo, ZTE, and Huawie.  My bet is on the Chinese.  The danger of the fast follower [or copier] is you are so focused on the leaders butt you don't see the changes coming.
  • Reply 12 of 62
    This I will believe when it happens. Lol.
  • Reply 13 of 62
    maestro64maestro64 Posts: 5,005member


    I was about to say this is the dumbest idea I have heard, but that is not true, other companies have made the same stupid move.


     


    Really, I am having a really hard time even entertaining this is even being considered. Apple made a smart purchase, bough a no name small company who made processor chips with one real customer (i.e. the government)  and turned it into what they wanted it to be. If Amazon buys TI mobile chip business with all its already existing contracts would be nightmare for a company who has no real clue about running a technology. They will have so many competing interest to deal with it will be a major loser for the.


     


    Again you have someone who thinks apple success is due to them buying chip company, it just one piece to the pie and Apple knew they could not truly differentiate their product without controlling the design of the processor. Look what Motorola did, they own their own chip designs and manufacturing and some stupid wall street type said they was a bad ideal so they sold it all off. They could have been in prime shape to take on Apple with their own designs and they threw it all away. 

  • Reply 14 of 62

    Quote:

    Originally Posted by Maestro64 View Post


    Apple made a smart purchase, bough a no name small company who made processor chips with one real customer (i.e. the government)  and turned it into what they wanted it to be.



    It's a little more than that, Apple bought two B2B companies, one specialised into cpu power efficiency (P.A Semi) and the other (Intrinsity) responsible for Samsung's hummingbird design.  Those two acquisitions made Apple core ARM engineering dept. 

  • Reply 15 of 62


    Originally Posted by Suddenly Newton View Post

    I'm waiting for Google to buy a chip business. Because that's the natural progression from search engines.


     


    Well, if the "natural progression" from Internet physical book sales is buying a chip company, Google will have some 'splainin' to do. image


     


    I'm concerned about what happens to all this intelligence and innovation in the stuff Amazon is buying up when their bubble finally bursts and they collapse. Hope it's not lost in the chaos.

  • Reply 16 of 62

    Quote:

    Originally Posted by Suddenly Newton View Post



    I'm waiting for Google to buy a chip business. Because that's the natural progression from search engines.


    Google's move was getting Motorola, I still wonder about Google strategy.

  • Reply 17 of 62


    it's starting to revert back to control your ecosystem.  The era of 'commodity' computing and 'layers' has evolved to App/Device/EcoSystem/Cloud.  


     


    App = the stuff that does stuff


    Device = The new 'API'/Library/code suite


    Network Layer = the gHz of the new model (as my wife say's  I need more "G's")


    Ecosystem = OS Platform 


    Cloud = Data layer... 'Intelligent Storage'


     


    When you look at it this way, you see how the 'money lays out,'  If you compare iOS devices with 'MS Office' or Oracle Financials, or SAP, you start to see why the hubbub.  It's the optimal point of lockin.  Microsoft was 'okay' until MS-Office and Windows kicked in... and those two things defined the 'experience' of Microsoft (badly, but it did).   


     


    I posit that it's the Device (coupled with the device OS) that drives money into the system now, by attracting users, app builders and critical mass for the ecosystem (ITMS/AppStore/iCloud).


     


    Amazon, realized this and saw the Kindle as the same tool... Different ecosystem, but the same ends.   


     


    As that stands, it can't let Apple get too far ahead, but more importantly, it can't allow Google and Microsoft to be 'in 2nd'   3rd place is a slow death in this game.


     


    In the current classic tiered model (non-Apple), the primary shares of the money is made on code suite (Office/Oracle/SAP) and in the OS (Windows).  Functions are derived by tweaking the back end (OS) and tying it to the suiteware... and let the end user or the developer integrate those into the custom apps that users then buy, which drive suiteware and ecosystem purchases. 


     


    Cloud is effectively a RAID... highly redundant, and highly scalable 'data' (yes, there is a whole lotta smarts there, but to the end user, it's just a picture of a TV set on a 'Buy Me Now" page, or the 'Play Now' Button at the bottom of a NetFlix page).


     


    So you start to see the reason why Amazon Apple and Google and johnny come lately Microsoft are competing at the Device Level.  Given that, in 10 years, how will you differentiate devices?


     


     


    So, the next click in this game is to drive the functionality of the device, which means faster and less power consumption in the same basic form factors (phone, small tablet, and large tablet).  So that pretty much means either being the same (and lagging slightly behind the Samsung/Google alliance), or differentiating.


     


    I'm not saying it's smart to copy, but it's a model that Apple is exploiting, and Microsoft is cash rich enough to attempt, and Google is BatSh*t crazy enough to doubledown on with it's MotoMobility plans.  So if I'm Bezos (a smart cookie), I'd be looking at making my Kindle's the best device possible, linked to the best retail ecosystem possible,  with arguably the best cloud system possible.   The latter 2 are done, so it really comes down to turbocharging the Kindle with power and battery to spare, to make it's uber attractive to developers.
  • Reply 18 of 62


    Microsoft ARM architectural license:



    http://www.eetimes.com/electronics-news/4204863/Microsoft-takes-ARM-license



     


    Quote:


    "Microsoft has signed an architectural license agreement with ARM Holdings plc, giving the software giant access to the ARM processor architecture and the freedom to design its own ARM chips. "


  • Reply 19 of 62
    MacProMacPro Posts: 19,383member

    What do you suggest?

    I mean I doubt the stock holders will feel comfortable with Amazon stretching even further.
  • Reply 20 of 62

    Quote:

    Originally Posted by Tallest Skil View Post


     


    Well, if the "natural progression" from Internet physical book sales is buying a chip company, Google will have some 'splainin' to do. image


     


    I'm concerned about what happens to all this intelligence and innovation in the stuff Amazon is buying up when their bubble finally bursts and they collapse. Hope it's not lost in the chaos.



     


    Amazon is not a 'book company' It's a retail company, that is getting into building devices the help people 'consume' products that Amazon sells.   The problem is Google and Apple sell stuff too.   Amazon needs to maintain 'Point of Sale Parity'  (PoS as an acronym being a double entendre)    


     


    If you look at 'splainin,' Apple was a HW company that got into the music selling business, then the movie selling business, then the movie rental, then the camera business, then the book selling, then magazine selling business.


     


    I do agree that Amazon's P/E is crazy... and this is a cash sink.  But can you see a better way to compete with Google and Apple, and eventually Microsoft (who makes Google look like a saint when it comes competitive technologies sharing their platform ).

Sign In or Register to comment.