Transmeta Crusoe chip delayed until November

Semiconductor maker Transmeta has missed a deadline to ship a new chip to manufacturers for a line of fast, low-powered laptop computers, the company said Tuesday.

The company hasn't finished testing its new .13 micron product, dubbed the Crusoe 5800, said Transmeta Chief Executive Officer and President Mark Allen in a conference call. The company had previously said that it would ship a finished version of the chip to PC makers at the end of September, before the close of its third quarter.

"While the 5800 design is achieving goals, we are experiencing delays in completing the process qualification," Allen said Tuesday.

Testing of the chip won't be finished until the fourth quarter, the company said. The 5800 was first unveiled in June. The delay means that hardware manufacturers won't debut new machines running the chip until sometime next month, Allen said. Some Transmeta customers will have laptops ready for the Comdex trade show in Las Vegas, which begins Nov. 12, the company said.

The 5800 will be available in speeds reaching 800MHz. While it has met its set requirements on processing speed and on power consumption, there are still some issues to be worked out. One of those is the chip's long-term operating life, Allen said. The company is working with its foundry partner, Taiwan Semiconductor Manufacturing Corp., to meet requirements in terms of the chip's long-term performance in a laptop, Allen said, although he was not more specific about what the performance issues are or what the overall problems have been.

"We've had to go through and make some adjustments to the process," Allen said. "We're still proving out many of those adjustments."

The news of the 5800's delay came as the company offered new guidance on its third-quarter financial results.The company now expects revenue to reach only US$5 million, about half of its earlier projection. The revenue shortfall is based mainly on a decline in spending in Japan, where Transmeta does the bulk of its business, according to the company's Chief Financial Officer Merle McClendon.

"Customers there continue to reduce order volume," McClendon said.

Sales of its Crusoe processors have fallen to fewer than 100,000 units per quarter, according to Mike Feibus, principal analyst with Mercury Research Inc, citing the firm's estimates. "That's pretty small," he said.

There has been an overall decline in microprocessor shipments in Japan, not just with the Crusoe line, Transmeta said.

Intel Corp. has also released a rival to Transmeta's low powered, high-speed chip, called the Pentium III processor-M. "Intel is really putting the pressure on Transmeta" with that new chip, Feibus said.

Transmeta will report full third-quarter earnings Oct. 18. At the same time, it will give an update on the progress of the 5800.

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