AMD invests $7.5 million in Transmeta

Advanced Micro Devices announced Friday a $7.5 million investment in chip designer Transmeta, strengthening the bond between the two chip companies.

As part of the investment, AMD will receive preferred shares of Transmeta. After the announcement, Transmeta shares rose 24 cents, or 34 percent, to 94 cents in late trading. Shares of AMD rose 20 cents, or 1.4 percent, to $14.39.

The investment bodes well for Transmeta, whose share price has slipped from the $2 range early last year. Transmeta has seen its financial performance squeezed as it has transitioned from a chip designer and manufacturer to one that focuses on licensing its technology.

"Transmeta was a key ally in helping to bring our highly successful AMD64 technology to market and has supported the widespread industry adoption of both AMD64 and AMD's HyperTransport technology," Dirk Meyer, AMD chief operating officer, said in a statement. He noted that AMD plans to further use Transmeta's energy-efficient technologies in its chips.

Last year, AMD announced that it planned to sell Transmeta's Efficeon chips under the AMD brand. The AMD-branded chips would go in PCs, as part of Microsoft's FlexGo project.

With the restructuring to an intellectual property licensing company, Transmeta in October filed a patent infringement lawsuit against Intel, which then countersued in January.

In May, the company reported first-quarter revenue of $2.1 million, versus $19.5 million a year ago. The chip company also noted a first-quarter net loss of $18.7 million, compared with a loss of $1.6 million the previous year.

The company also announced, as part of its first-quarter earnings, it would reduce its workforce by 15 percent to 20 percent in the second quarter.