SANTA CLARA, Calif. -- In the latest setback in its relatively short history, Transmeta Corp. on late Wednesday announced that it discovered a faulty batch of microprocessors in a notebook PCs made by NEC Corp. of Japan.
Transmeta (stock: TMTA), a high-profile startup supplier x86-based processors, said it is working with NEC (stock: NIPNY) to correct the problem by replacing the faulty chips in about 300 of notebook PCs.
A spokesman for Transmeta insisted that the problem only involves some 300 of its processors, dubbed the Crusoe line.
"It's a limited batch," the spokesman said.
The problem with the processor involves the possibility that a failure might occur in a system if a consumer were to reinstall an operating system, according to the spokesman.
"There are no problems running applications," he added.
But still, NEC has already shipped an undisclosed numbers of systems with the faulty processors in the channel.
"It's unclear how many systems are in the channel," the spokesman said.
He added that NEC is setting up a hotline for customers who may have purchased a system with a faulty chip.
The problem with its chip line is only limited to NEC, according to Transmeta.
The potential issue is contained to a limited number of Transmeta's Crusoe microprocessors "and, due to the rarity of this event, is not expected to impact end consumers," they added.
Remaining inventory of the flawed material at NEC or other customers has been returned to Transmeta.
No other details were provided. But the announcement represents the second setback for the company in recent weeks.
Recently, IBM Corp. (stock: IBM) scrapped a notebook computer line based on a processor from Transmeta, reportedly due to the disappointing performance of the chip.
On the other hand, Transmeta has garnered several major design wins.
In addition to NEC, the U.S. company's OEM customers include Fujitsu; Hitachi LTD (stock: HIT); Gateway Inc. (stock: GTW); and Sony Corp. (stock: SNE), among others.