Transmeta to leave the CPU market

The reason behind the change is likely related to some of the manufacturing and strategy issues that the company faced immediately after the release of Crusoe—problems that ultimately hurt Transmeta's position in the chip market and indirectly helped to propel Intel forward. After considering exiting the CPU business nearly two full years, it seems the company has finally accepted its fate and taken the first steps to transition itself to an intellectual-property licensing company—the first steps of which involved laying off 39 percent (75 employees) of the company last Friday, mostly in engineering services.

President and CEO of Transmeta Les Crudele said in this morning's conference call that "Over the past year, the level of activity for engineering services has declined dramatically due to the completion of programs and our customers' declining staffing requirements," adding that new projects were not meeting the overhead required to continue running that part of the business. Transmeta also expects to lay off another 25 to 55 employees throughout 2007, and has begun the process of closing sales offices in Taiwan and Japan.