June 1, 2005 10:21 AM PDT

Transmeta sells, licenses chips to Hong Kong outfit

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Struggling chip designer Transmeta has found a buyer for its microprocessor business.

Culture.com Technology Limited, a subsidiary of Culturecom Holdings of Hong Kong, will purchase the rights to the Crusoe microprocessor, the first chip produced by Transmeta, and acquire a license to produce its successor, the Efficeon chip, on 130-nanometer manufacturing processes.

Transmeta will continue to produce 90-nanometer Efficeon chips for a few select customers, but will discontinue producing the 130-nanometer versions by the end of the year and leave those chips to Culture.com.

Culture.com will try to sell Crusoe and Efficeon processors to electronics manufacturers serving the Chinese market. It will combine the chips with its own Chinese-language software.

Under the terms of the deal, Culture.com will pay Transmeta $15 million in cash, or about $10 million less than Transmeta lost in its most recent quarter. The deal is slated to close in the fourth quarter.

The deal marks the latest twist in the Transmeta melodrama. The Sunnyvale, Calif.-based company, which counted Linus Torvalds as an early employee, hoped to challenge Intel in notebooks with processors that consumed far less power. Despite signing deals with brand-name manufacturers such as Sony and Fujitsu in 2000, tepid performance reviews and product delays followed in 2001.

Deals dried up, three CEOs came and went, and financial losses increased. Since 1998, the company has posted accumulated losses of $635 million on revenues of $134 million.

Transmeta's early successes, however, did have a lasting effect: They prompted Intel to come up with the Centrino processor, chipset and network-interface bundle.

Rather than try to sell chips, Transmeta mostly will concentrate on licensing its intellectual property. Earlier this year, Sony reaffirmed that it will license Transmeta technology for curbing power consumption and likely will incorporate it into PlayStation 3.

The company said it would try to sell its chip business at the beginning of the year.

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But it was predictable. The story got it right; once Intel pulled it's finger out (you choose the location) Transmeta had no market to sell to.
Posted by Andrew J Glina (1673 comments )
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