Next Crusoe chip bogged down in testing

Four months after it was first announced, the energy-efficient Crusoe 5800 still isn't shipping in production volumes to notebook makers. And although notebooks using the chip are expected to appear around the time of the Comdex trade show in mid-November, Transmeta is still performing final tests.

The Santa Clara, Calif.-based chip designer is concerned that an unacceptable number of chips may be statistically subject to failure.

"We want to ensure the long-term functionality of the product," Transmeta Chief Executive Mark Allen said Tuesday. "We're still completing tests on long-term operating life." He declined to be more specific.

Kevin Krewell, an analyst at Microprocessor Report, said that Allen is likely referring to accelerated life testing, the process under which manufacturers stress the chip by exposing it to high voltages or extreme heat to determine whether it can endure an acceptable amount of chaos over a normal lifetime.

The problems with the chip stem, in part, from the difficulty involved in manufacturing it, said a representative of Taiwan Semiconductor Manufacturing Co., the contract manufacturer for Transmeta.

"This product involves several complex modifications that other customers aren't doing. There are extensive unique elements to the design," a TSMC representative said. "We're not having a problem with our (manufacturing) process. There is one single problem remaining and we expect to resume production" in the current quarter.

The extent of the delay is a matter of debate. Transmeta originally announced the chip on June 25, stating at the time that the 5800 was "immediately available" for $198 in 1,000 unit quantities. Notebooks sporting the chip were expected to launch later in the year.

A Transmeta representative said Tuesday that June's statement meant that the chip was being produced in samples for evaluation purposes. However, other sources noted that evaluation chips are usually given away for free and not listed with quantity prices.

"I am mystified as to what 'immediately available for $198' means, if it is not volume shipping," said Joe Osha, an analyst at Merrill Lynch, who speculated that the company could be having problems with power management inside the chip.

"It is an obvious delay," Krewell said.

Regardless, the production problems have been around for a while. "At a point in the past, the yields were low because of these problems," the TSMC representative said.

TSMC, which signed a manufacturing agreement in February, is the sole source of the 5800 chips, Allen said. IBM made earlier versions of Crusoe on behalf of Transmeta.

Despite the delay, the first notebooks using the chip are still expected to come out in the second half, as the company predicted earlier. And the high-tech market in Japan, where the vast majority of Transmeta's chips are sold, has shrunk steadily since June, creating a backlog of notebooks that would have likely dampened sales of the new chip anyway.

The chip is expected to come out at 600MHz to 700MHz. By the first quarter, the company expects the 5800 to hit 1GHz, Allen said.

Because of the economic situation in Japan, Transmeta warned Monday that it will miss its revenue targets for the third quarter. And a recovery in Japan is still a long way off.

"The Japanese economy won't recover until after the U.S. economy," said Allen, citing recent economic data.

Although the company landed some impressive design wins with major notebook makers such as Sony in its chips' first year, its ultimate success is "too close to call," said Alan Promisel, a IDC analyst. "It is hard to bet against the gorilla."