The two chipmakers band together to improve energy-efficient processor designs and to hold off competition from Intel.
Advanced Micro Devices on Friday invested $7.5 million in Transmeta, another x86-architecture chipmaker.
In exchange, AMD will receive Transmeta's preferred stock, the companies said.
Transmeta develops and licenses microprocessors, semiconductors, and related intellectual property. It's currently focused on licensing its advanced power management technologies, which control leakage in computing devices and make them more power efficient, according to the company.
AMD will collaborate with Transmeta on creating advanced computing technologies, said a company spokesman, benefiting from Transmeta's power-efficient, high-performance, and low-cost microprocessors. Meanwhile the investment is expected to help Transmeta -- whose share price and revenue have declined -- to get back on track financially.
Best known for its Crusoe processor, Transmeta helped AMD bring its AMD64 technology to market and has supported industry-wide adoption of AMD64 and AMD's HyperTransport technology, said Dirk Meyer, president and chief operating officer of AMD, in a statement.
"Our investment will support Transmeta's technology development work and AMD's efforts to leverage Transmeta's innovative energy-efficient technologies to the benefit of AMD's customers," Meyer said.
AMD last year announced plans to sell Transmeta's Efficeon processors under the AMD brand. The powerful, yet energy-efficient, processors are designed for servers, PCs, and handheld devices that deliver faster performance but don't use a lot of battery power.
Both companies have struggled financially of late and have announced headcount reductions as a result. In the first quarter of 2007, AMD reported a net loss of $611 million. The loss was blamed on a price war with Intel and AMD's merger with graphics chipmaker ATI Technologies, which AMD acquired last year for $5.4 billion.
Transmeta, in the same time period, reported a financial net loss of $18.7 million. The report revealed first quarter revenue of $2.1 million was down from the previous quarter's $2.39 million in revenue and $19.5 million in revenue from the same quarter a year ago.
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