Texas Instruments will lay off 1,700 employees as it refocuses its efforts away from the wireless sector - including cellphones and tablets - and toward embedded systems, the company announced Wednesday.
Amazon had been rumoured to be in talks with Texas Instruments to buy its mobile chips business.
The news comes less than a month after TI said its wireless business recorded its third-straight quarter of losses.
TI has targeted its OMAP processors at cellphone and tablet PC makers, and its OMAP chips had found a number of big-name customers including Motorola, Samsung, Sony Ericsson, Huawei, Amazon and Barnes & Noble.
But TI said it plans to refocus its development efforts in new areas as device makers look to develop their own processors. Apple and Samsung, two of the top smartphone makers, both design their own chips, using technology from ARM Holdings.
During its most recent quarter, TI said wireless sector sales had fallen by almost half against the same period a year earlier. The business, which recorded a US$78 million profit in the same quarter a year ago, fell to a $53 million loss.
Device makers are being influenced by Apple, which initially used off-the-shelf processors in its iPhone line and recently made a switch to an Apple-developed processor called the A6.
Embedded devices refer to products that are custom-designed to do a single job, such as a car navigation system or air conditioning controller.
"We have a great opportunity to reshape our OMAP processor and wireless connectivity product lines to concentrate on embedded markets," Greg Delagi, senior vice president of Embedded Processing at TI, said in a statement. "Momentum is already building with new embedded applications and a broad set of customers, and we are accelerating our efforts in these areas."
While TI's embedded business is doing better than its wireless division, the results are also falling.
Revenue dropped by 4 percent in the most recent quarter, to make the embedded division larger than the wireless division, while profits fell 44 percent to $63 million.
The layoffs will hit TI employees worldwide. The Dallas, Texas-based company said it hopes to save $450 million per year from the restructuring, which will incur a one-off cost of $325 million.