Why Amazon is Not Interested in TI’s Mobile Processor Group

Ben Bajarin / October 15th, 2012

Image Credit: iFixit Some reports have came out that Amazon is interested in TI’s mobile processor division. I find this extremely difficult to believe. I personally, think TI’s move to shift focus from mobile APs (application processors) and more into embedded chipsets is a fascinating market development. However, I think it is a serious stretch to connect the dots that Amazon would use their extremely valuable cash to acquire something they don’t really need given their business model.

If Amazon was in the for profit hardware business then I can see how a case could potentially be made for purchasing TI’s OMAP mobile AP group. However they are not in the for profit hardware business and are rather in the hardware as a service business. They make practically nothing on the hardware and within the business model they are entrenched in, it would take an incredibly long time if ever to recoup their investment in a semiconductor group.

Furthermore, TI licenses and ships the ARM core but does not have an architectural license to customize or alter the chipset design like Qualcomm, NVIDIA, Apple, and Samsung do. If the logic was that Amazon was going to use proprietary semiconductor assets to help them further differentiate their hardware, I’m not sure acquiring TI’s OMAP group would do this. In fact if this was the logic then it would be just as easy, and probably cheaper, for Amazon to acquire an ARM architecture license and simply hire a team of qualified SOC engineers.

However, because Amazon is building a hardware as a service business, it seems unlikely that making a large investment around hardware makes sense. Companies that are in the hardware as a service model are generally better served simply negotiating and buying components rather than making them.

Several reports also mentioned Amazon’s intent to get into the smartphone market and speculated that buying this group from TI could help this initiative. I continue to remain skeptical that Amazon will make a smartphone. I simply can’t see how it fits with their business model. Amazon is a retailer and any argument as to why a retailer should make a smartphone would be null in light of an argument that those same reasons can be accomplished with an app running on any platform. The many reasons why Amazon (a retailer) made a tablet does not translate into why they should make a smartphone.

Of course we can’t rule anything out in this industry, especially considering I would have never guessed an advertising company would have gotten into the smartphone hardware business. Or could I?

Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio
  • Rich

    Amazon sells the Kindle Fire as a portable way to buy stuff from their infinite catalog. For Amazon to purchase TI’s mobile processor division would be expensive (I saw one estimate of billions of dollars) and even with Amazon’s willingness to wait a long time for profits from a new operation, I don’t see how offering a smartphone would increase sales from their catalog enough to justify the expense of acquiring TI’s mobile processor division.

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