Transmeta investment could be a benefit in the LongRun

What’s AMD doing investing in Transmeta? Given its focus on cost-savings of late, AMD could be thinking that spending $7.5 million with Transmeta, now, could possibly help save many millions in research and development in the future.

Here’s why: Transmeta may be best known for making low-power chips. But more recently it has specialized in helping other chipmakers reduce the power of their processors. Thus Transmeta has, in its LongRun, a processor power-saving technology that could be of use to AMD as AMD pushes the envelope on reducing the power consumption of its processors. Indeed, AMD has said that it is evaluating LongRun. AMD has not yet licensed either technology. However, utilizing LongRun could potentially help AMD cut the power consumption of its PC and server chips. This would certainly help AMD from both a competitive point of view versus Intel and also allow AMD to highlight low power in its marketing.

What AMD did was invest $7.5 million in return for Transmeta preferred stock. For AMD, $7.5 million is a relatively small sum. But for Transmeta, whose revenue was $2.1 million in the first quarter of 2007, it’s a good bit of funding. It seems pretty clear that AMD wants to help keep the fellow semiconductor company. Will they eventually work more closely together? It seems likely as AMD and Transmeta have had a long-standing relationship. Back in 2001, Transmeta licensed HyperTransport as well as AMD’s x86-64 technology from AMD. During 2006, AMD announced plans to resell Transmeta’s Efficion processors as part of FlexGo, Microsoft’s pay-as-you-go computing platform for emerging markets.