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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

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




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.

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


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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.