Amazon Fire Boosts Orders At Texas Instruments

| About: Texas Instruments (TXN)
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Consumers are buying tablets at a break neck pace this year, which is yielding an entirely new crop of industry picks and pans. The buying frenzy has industry trackers diving deeper. They're tearing down, reviewing, compiling and dissecting every data point in order to find tomorrow's winners and losers.

The latest piece of information in the tablet puzzle comes from comScore, which offered market share insight for Amazon's (NASDAQ:AMZN) Kindle Fire last week.

Kindle Fire Market Share Ramped in February.

According to comScore, the rock-bottom priced Fire has done its job of winning the hearts and wallets of Android shoppers. Unlike the pricier and more margin friendly Apple (NASDAQ:AAPL) iPads, the Fire launched last fall with one goal: to grab market share and drive digital sales growth for Amazon.

The latest data suggests the strategy is paying off, with the Fire commanding 54.4% of the Android tablet market in February. This is a big jump from the 29.4% share it held during the holidays. But, it's a bit understandable. After all, shoppers tend to be a bit more price conscious after the holidays.

Importantly, Amazon's market share growth shows it's perfectly positioned to benefit from the rapid adoption of tablets this year. According to Gartner, global tablet sales will run just shy of 119 million units this year - just about double last year's pace.

Of those units, Android OS tablets will account for about 32%, or roughly 38 million devices. If Amazon retains its leadership position, such a rate suggests the company will sell over 20 million Fire's this year.

Ramping production offers upside at Texas Instruments.

In turn, this is good news for Texas Instruments (NYSE:TXN), which according to iFixit's teardown last fall, owns most of the chip slots in the device. The grocery list of TI chips in the Fire include the 603B107 power management IC, LVDS83B transmitter, AIC3110 Audio Codec - sorry Cirrus (NASDAQ:CRUS) - WS245 transceiver, WL1270B Wi-Fi chip - sorry Broadcom (BRCM) - and the OMAP 4430 processor - sorry Qualcomm (NASDAQ:QCOM).

Amazon clearly needed a low cost supplier with scale in order to hit its $199 price target. In TI they found a partner willing to give them both in exchange for slot dominance.

But, the Fire's importance to TI goes beyond chip volume. The win helped reinvigorate the company's wireless business, which has struggled amid declining market share at Nokia (NYSE:NOK) -one of its biggest customers.

Ramping sales of the Fire have put TI's idled capacity back to work and provided a template showcasing the company's ability to meet OEM demands. Given TI's Q1 book-to-bill ratio came in at 1.04, far better than the 0.84 it logged in Q4, orders are on the upswing and that's good for shareholders.

Disclosure: I am long QCOM.