Internet retail giant Amazon is in talks with Texas Instruments to acquire its mobile chip business, according to Israeli financial newspaper Calcalist (via Reuters).
The deal, which would be valued at billions of U.S. dollars, would put Amazon in a stronger position to compete against Apple and Samsung in the tablet market, and may also pave the way for the company to create its own smartphone.
Amazon's Android-powered Kindle Fire tablet was a huge success, capturing over half of the market in a matter of months. The firm's new Kindle Fire HD tablets are showing signs of similar success, but in order to keep prices low Amazon has had to turn to in-device advertising to keep costs down.
Last month, Texas Instruments said that the company was going to lower its focus on mobile devices and target industrial clients, such as car manufacturers. The company did say that it would continue to support its customers such as Amazon, but it would not invest in their future roadmap for tablets and smartphones with as much enthusiasm as before.
This is likely down to the fact that the consumer mobile devices industry is a cut-throat market, with manufacturers putting huge pressures on the supply chain -- which Texas Instruments is part of -- to cut prices, keeping profit margins razor thin.
Itis worth noting that tablet playes such as Barnes & Noble use Texas Instruments processors -- the OMAP -- in its hardware. Microsoft has also endorsed the OMAP for its Windows RT ARM-powered tables. This deal, if it goes through, could cause some sleepless nights for the other players.
Some have their doubts though. Gartner analyst Carolina Milanesi told Reuters that she doubted whether Amazon would want to "become that intimately involved with hardware".