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Advanced Micro Gives Transmeta Cash Infusion

It will buy a $7.5 million preferred stake.

Updated from 11:29 a.m. EDT

Advanced Micro Devices

(AMD) - Get Advanced Micro Devices, Inc. Report

is investing $7.5 million in the struggling intellectual-property chip firm

Transmeta

(TMTA)

.

AMD will receive preferred stock in Transmeta under the terms of the deal, announced Friday.

The announcement sparked shares of Transmeta, sending them up 22 cents, or 31.2%, to 92 cents in midday trading Friday.

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The deal comes as Santa Clara, Calif.-based Transmeta has become more aggressive about asserting its intellectual property rights. In November, Transmetasued

Intel

(INTC) - Get Intel Corporation (INTC) Report

for violating 10 of its patents covering computer architecture and power efficiency.

An AMD spokesman said the deal was not a settlement of any intellectual property claims asserted by Transmeta. AMD is currently evaluating certainTransmeta technologies such as LongRun and LongRun2, but is not yet a licensee, he said.

"Transmeta has been an innovative force in the industry for more than a decade," said AMD President Dirk Meyer in a statement.

"Our investment will support Transmeta's technology development work and AMD's efforts to leverage Transmeta's innovative energy-efficient technologiesto the benefit of AMD's customers," Meyer said.

Transmeta began its life in the 1990s, making special, energy-efficient versions of the x86 microprocessors used in PCs. The company struggled to get a footholdin the market however, and has recently re-invented itself as a semiconductor intellectual property firm.

AMD shares were recently up 6 cents to $14.25.