Looking to the future of its tablet and e-reader business,
) may acquire the mobile chip business of Texas Instruments
). According to
, Calcalist (an Israeli financial newspaper) has confirmed that
Amazon has already entered into advanced talks with Texas
Instruments to finalize the acquisition. The deal is expected to
be worth billions of dollars to Texas Instruments.
By acquiring a chipmaker, Amazon would be able to play a
greater role in the devices it produces. The company already
manufactures four versions of the Kindle Fire tablet, as well as
multiple versions of the Kindle e-reader. Amazon is expected to
unveil its first smartphone in 2013.
This acquisition is not unprecedented for Amazon, which has
been spending millions to bolster its core businesses. In 2012,
the online retail giant signed more viewing content deals for its
streaming video service, Amazon Prime, than either of its chief
competitors -- Netflix (NASDAQ:
) and Hulu. Tablets are a key part of that strategy, which is to
get consumers to use Amazon's own products and services. This is
a departure from the retailer's initial goal, which was simply to
ship and sell other manufacturers' products at a reasonable
If Amazon completes the acquisition, it could be a problem for
Barnes & Noble (NYSE:
) and other manufacturers that use chips made by Texas
Instruments. The Nook HD+, one of two new tablets Barnes &
Noble set to be released this fall, features a Texas Instruments
1.5 GHz OMAP4470 Dual-Core Processor. While Amazon could still
manufacture chips for its competitors, it could also choose to
save the best processors for its own devices.
Thus far, Amazon has favored price over quality. While the new
Kindle Fire tablets have made a significant leap ahead of their
11-month-old predecessor, the updated tablets were still designed
to undercut the price of Apple's (NASDAQ:
) iPad. By expressing interest in designing its own chips, Amazon
might be looking to change that in the near future and compete on
a level playing field.
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.