Troubled Transmeta also disclosed that the product delays would cause a major shortfall of sales in its fourth quarter, which ends Dec. 28. In the quarter, the company said it will only report $1 million in sales, an 80% decline from the third quarter of 2001 and a 91.9% drop from the like period a year ago.

Executives from Transmeta also revealed that the company has been forced to make some unexpected but undisclosed revisions with its photomask sets for its 0.13-micron processor designs. The move would delay the mass production of these 0.13-micron chips from November of this year, to February of 2002.

The problems revolve around the company's TM5500 and TM5800 line of processors. Introduced last summer, the TM5500 and TM5800 are 600- to 800-MHz chips, based on a 0.13-micron process from TSMC (see June 13 story ).

Transmeta--which has been beset by a series of product delays and losses in recent times--has been able to ship limited quantities of the 0.13-micron chips. But it must delay volume production until it makes the mask revisions within its key foundry partner--TSMC. The Hsinchu-based silicon foundry giant is reportedly making the reticles for Transmeta within its own mask shop, analysts believe.

A spokesman for TSMC declined to comment on Transmeta's production problems, but noted that the Hsinchu-based company is working closely with Transmeta to resolve the issues.

Executives from Transmeta did not exactly blame TSMC for the glitches, but noted that the company's transition from 0.18- to 0.13-micron technology has proven to be a major headache.

"The transition to 0.13-micron technology proved to be more difficult than we originally thought," declared Murray A. Goldman, the new chairman and CEO of Transmeta, in a conference call to analysts.

"Although our unit shipments of TM5500 and TM5800 productsincreased during the month of November, we fell substantially short of our production goals," Goldman said.

"We are disappointed by these results," he said. "Unfortunately, we concluded that it was necessary to make metal mask revisions in order to achieve our volume manufacturing goals using the new 0.13 micron manufacturing process, which in turn had a significant effect on our ramp schedule," he said.

"In the meantime, we are continuing to manufacture our new products in small volumes until our new mask set is in production, and our production plan contemplates volume production for customer shipments in early February," he added.

In the conference call, Goldman stated that the company is working closely with TSMC to resolve the undisclosed problems with the mask sets. Transmeta has no plans to drop TSMC as its foundry partner, the long-time chip veteran hinted.

This week, Transmeta apparently made some revisions with the mask set, he said. It will test the chips in the next month or two, he said. "We will see the first probe of the mask sets in early January," he said.

The executive also insisted that the problems would not impact future products, including its previously stated goal to roll out a 1-GHz processor in the near future.