Friday, February 10, 2006
Export controls have killed Transmeta Corp.’s planned asset sale to and license agreements with China-based Culturecom.
The company today announced that it and Culturecom Technology Ltd., a fully owned subsidiary of Hong Kong-based Culturecom Holdings Ltd., will terminate plans from May 2005 for Transmeta to sell its Crusoe product line to Culturecom. Additionally, Culturecom's plans to license Transmeta's 130nm Efficeon technology to Culturecom to make and sell Efficeon-based products in China have now been cancelled.
The original deal was struck last Spring after Transmeta announced a reorganization to change its business model from a fabless processor company focusing on the low power mobile market into more of an IP company. To accomplish this Transmeta sought to sell its primary assets, including Crusoe, it's revolutionary flagship processor that many would argue had been one of the factors that compelled Intel and AMD to re-evaluate their efforts to offer lower power mobile processors.
Transmeta reorganized just as it was releasing its second generation processor, Efficeon, at the next process node of 90nm. Therefore, it also licensed the legacy generation Efficeon, 130nm, to Culturecom.
The combination of asset purchase and licensing agreements was valued at $15 million. The two companies said they mutually terminated those agreements based upon their concern that they could not satisfy all of the approval conditions necessary to close the agreements in Culturecom's timeframe. The deal had originally been slated to close in Q4 2005.
"Our Crusoe and 130nm Efficeon processors are still considered very advanced, controlled technology from an export control perspective, even though they have reached the end of their competitive lifecycle for Transmeta's ongoing business," said Arthur L. Swift, president and CEO of Transmeta, in a statement. "After several meetings with U.S. government officials, Transmeta and Culturecom mutually concluded that the necessary technology export control approvals could not be obtained for these two agreements within the timeframe necessary to satisfy Culturecom's commercial requirements."
Transmeta and Culturecom have had a historical business relationship dating from 2003, when an affiliate of Culturecom, Chinese 2 Linux Holdings Ltd., licensed Transmeta's Midori Linux software for the development of embedded applications.
Transmeta said the termination of the two agreements is not expected to have an adverse impact on its financial outlook. Transmeta and Culturecom have reaffirmed their continuing commitment to work together on initiatives of mutual interest.
By: DocMemory
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