Transmeta ( TMTA) shares surged 10% before the open Thursday after the company and a unit of NEC ( NIPNY) said they had formed a strategic alliance, under which the Japanese tech company would acquire a small stake in Transmeta.

The stock of the Santa Clara, Calif., chipmaker was up 38 cents, or 10.6%, to $3.97 in premarket trading.

Under the agreement, NEC Electronics has licensed Transmeta's LongRun2 technology for use in its semiconductor products. Transmeta's technology is aimed at "improving chip performance and reducing manufacturing costs." In particular, the technology is meant to help the industry deal with the "growing problems of excessive chip heat and transistor leakage."

Transmeta said NEC had purchased a "small percentage" of its common stock as part of a 25-million-share common stock offering that was priced Dec. 18.

If you liked this article you might like

Spain to Play Netherlands for World Cup

Spain to Play Netherlands for World Cup

Wal-Mart: Analysts' Upgrades, Downgrades

Wal-Mart: Analysts' Upgrades, Downgrades

Netherlands Advances to World Cup Final

Netherlands Advances to World Cup Final

Apple: Analysts' Upgrades, Downgrades

Apple: Analysts' Upgrades, Downgrades

World Markets Mostly Lower Monday

World Markets Mostly Lower Monday