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Transmeta cuts Q4 revenue forecast to $1m

0.13 micron problems to blame for 80% decline in sales

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Transmeta has cut its Q4 revenue forecast to $1 million, blaming the shortfall on problems getting sufficient 0.13 micron Crusoe TM5500 and TM5800 processors out to customers.

Last quarter, Transmeta's sales totalled $5 million, down 52 per cent on Q2's $10.5 million, itself down 44 per cent on the $18.6 million figure it posted for Q1. If the company does indeed post Q4 revenues of $1 million, it will mark an 80 per cent fall on Q3.

Transmeta lost $29.6 million (22 cents a share) during Q3, and it's hard to see Q4 proving any better.

Essentially, what has held Transmeta back are problems producing its 0.13 micron processors, which are being fabbed by TSMC. The Taiwanese foundry's 0.13 micron process has come in for some criticism of late, what with Transmeta's ongoing problems, Nvidia's move to sign up TSMC rival UMC, and rumours that VIA and Broadcom are unhappy with the quality of TSMC-sourced product.

However, Transmeta CEO Murray Goldman was keen to stress the "co-operation and support" his company has received from TSMC.

Transmeta, he said, has been forced to make fundamental changes to the construction of its 0.13 micron chips. That, in turn, hit the company's ability to ramp up production of the chips. It's not clear to what extent the problem lies with Transmeta's design or TSMC's process. That the problem affects two different chip designs using the same 0.13 micron production process, it's hard to conclude that the blame lies with the former. But since Transmeta needs TSMC more than TSMC needs Transmeta, it presumably has to be more than a little circumspect about pinning blame.

TSMC will continue to produce small numbers of TM5500 and TM5800s using the current chip masters.

However, Goldman admitted, chips based on the new masters will not appear for some time, and volume production isn't likely to be reached before February.

That will ensure Transmeta's January sales are not going to improve over their current levels. That isn't going to help Transmeta raise Q1 2002's revenues, particularly if its customers decide they can't wait. At this stage it's not clear how the current problems will affect the timing of the 1GHz TM5800, broadly scheduled to debut sometime during the first half of 2002. ®

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