Transmeta Agrees to Sell Microprocessor Chip Business for $255 Million

Transmeta, which once pursued Intel and Advanced Micro Devices with low-power processors for notebooks and desktops, has agreed to sell its remaining intellectual property and assets for $255.6 million.

On Nov. 17, Transmeta announced that it had agreed to sell its intellectual property to Novafora, a fabless, privately held semiconductor company that is developing digital video processors. The deal is expected to close in the first quarter of 2009 and requires approval by the boards of both companies.

Transmeta executives announced in September that they were putting the business up for sale.

The announcement that Transmeta would sell off the remainder of its intellectual property and merge with Novafora brings an end to a storied semiconductor company that once challenged Intel with a line of low-power x86 processors that held the promise of better battery life and other benefits for PCs.

While Transmeta’s innovation helped shine a spotlight on the company, it also forced Intel to shift gears and the chip giant began developing new, low-power processors which began taking business away from Transmeta. Eventually, Transmeta moved away from designing chips such as the Crusoe processor and focused on revenues from its LongRun and LongRun 2 technologies, which allow for dynamic control of the frequency, voltage and transistor leakage within a microprocessor.

Transmeta later filed a patent infringement lawsuit against Intel and won a settlement.

In addition to announcing the sale of the company Monday, Transmeta inked a new, non-exclusive patent licensing deal with AMD. Under the agreement, AMD will transfer to Transmeta 700,000 shares of Transmeta’s Series B preferred stock that is now held by AMD.

The agreement with Transmeta will also work with The Foundry Company, which is the new business that formed when AMD spun off its manufacturing division in October. Under the agreement with Transmeta, The Foundry Company’s license covers the manufacturing of processors and related operations, while the AMD license covers the design, manufacture and sale of processors, said Michael Silverman, an AMD spokesman.