Under the agreement, AMD will pass on to Transmeta all the intellectual property required to develop processors based on AMD's X86-64 technology, as well as the designs for the HyperTransport technology. Exact terms of the deal, including whether Transmeta will pay any royalties or a licensing fee, remain under wraps.

"AMD is becoming a technology leader," said Fred Weber, chief technology officer for the Sunnyvale, Calif.-based processor company. "From our point of view, this agreement creates strength behind what we think will be some pretty important standards."

Although Transmeta's main focus to date has been low-power chips aimed at the notebook PC market, it has also begun to move into the server area. But as server designs become more advanced, they need much higher amounts of memory. And that — according to Nathan Brookwood, principal analyst for technology research firm Insight64 (Saratoga, Calif.) — requires a shift to 64-bit processing, because a 32-bit MPU can only address up to 4 Gbytes of system memory. "That is the most compelling argument for 64-bit processors," Brookwood said.

Lacking a high-performance 64-bit chip design for that space, Transmeta's options were limited to designing its own server MPU, trying to copy Intel's 64-bit architecture or licensing AMD's technology, Brookwood said. "Of those options, the AMD approach is the easiest," he said. "If they want to play in the server market, this is something they will need."

David Ditzel, founder, vice chairman and chief technical officer for Transmeta (Santa Clara, Calif.), said that the company had considered developing its own 64-bit processor from scratch but noted that his vision was similar to the AMD approach, which helped lead them to the licensing deal. He also said that using the HyperTransport bus was a big step up from the current PCI bus format. "HyperTransport is 24 times faster than PCI, so that ought to hold us for a while."

Brookwood speculated that AMD may be giving Transmeta the technology for free, pointing out that AMD's real benefit comes from having its architecture gain greater share in the overall computing market.

AMD's Weber confirmed that he sees the proliferation of its architecture as a major plus, even if it means that the company will be competing directly against Transmeta-branded chips with AMD technology. He said that the increased momentum for AMD's X86-64 architecture will lead more software vendors to develop products and operating systems for the platform and thus expand the overall market.

"There is no advantage to anyone in having the hardware and software vendors chasing multiple standards," Weber said. "We're making the pie a little bigger, and we think we will get our fair share."