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Rumor: Amazon May Buy SoC Business from TI

Israeli financial newspaper Calcalist reported on Monday that Amazon is in advanced talks with Texas Instruments to purchase the chipmaker's System-On-Chip (SoC) business.

Amazon is one of TI's biggest customers, currently using the OMAP4470 in the just-launched Kindle Fire HD tablets. The purchase, if the report is true, would be worth "billions" of dollars and would make Amazon a direct rival to Apple, Samsung, Nvidia and other chip makers.

Last month, TI said during an investor call that the smartphone market has become a less attractive long-term opportunity for TI’s OMAP products, primarily due to vertical integration and market consolidation. The company reportedly plans to focus on a broader embedded market that will include industrial clients like car manufacturers.

"TI remains committed to the OMAP platform and its customers," TI told Tom's. "The team is not 'leaving the mobile industry for good,' and will not leave current mobile customers. Though TI is accelerating the expansion of OMAP processors into a broader set of embedded applications, the team remains dedicated to advancing current mobile customers’ OMAP processor-based product lines."

Based on that comment alone, it would seem that TI has no plans to exit the mobile business nor sell its SoC business. Even more, Gartner analyst Carolina Milanesi told Reuters that it's highly doubtful Amazon will want to "become that intimately involved with hardware."

Then again, Ben Wood, head of research at British wireless consultancy CCS Insight, doesn't find it surprising that Amazon wants TI's chipset arm. The latest trend is "vertical integration," a movement led by Apple which produces its own ARM-based chips for the iPad, iPhone and iPod Touch.

Shares in Amazon were up 0.8-percent to $244.39 in premarket trade on Nasdaq while TI shares were up 1.9-percent to $27.8, Reuters said.

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