The acquisition will also position AMD against other MIPS licensees, including Integrated Device Technology Inc., NEC Corp., PMC-Sierra Inc., and Toshiba Corp.

Founded in 1999, Alchemy Semiconductor recently started shipping standard embedded products based on its Au1000 processor core, which dissipates 1 watt at 500 MHz or 0.5 W at 400 MHz. That performance-to-power ratio places the Alchemy's products in the mid-to-high performance range that Intel targets with its Xscale processor.

The acquisition will return Advanced Micro Devices to the embedded processor market. The company withdrew from embedded competition when it dropped its RISC-based Am29000 product line in the mid-1990s. Intel, meanwhile, found a gem in the StrongARM processor it acquired in its purchase of some Digital Equipment Corp. semiconductor resources. Intel currently sells products based on the StrongARM core, and is preparing chips based on the Xscale core, which is compatible with StrongARM.

Ironically, two of Alchemy's founders — chief technology officer Rich Witek, and vice president of engineering Greg Hoeppner — led the StrongARM design effort while at Digital Equipment's design center in Austin, Texas. The two decided not to join Intel it acquired Digital's StrongARM assets and the fabrication facility in Hudson, Mass. where StrongARM products were made.

Along with other members of the original StrongARM design team, Witek and Hoeppner found early support from Cadence Design Systems Inc. In May 2000, Alchemy became independent from Cadence and attracted funding from U.S. Venture Partners, Austin Ventures, and Telos Ventures.

Difficult round

Though Alchemy achieved more than 15 design wins for its Au1000 product over the past year, the 75-person startup faced difficulty as it tried to raise funds for its second round of financing. While many venture capital firms were willing to play a supporting role for Alchemy's Round B funding, the process of finding a lead investor proved to be "a long and complicated process, given the market conditions and the post-Sept. 11 environment," one source said.

Alchemy had also targeted the mobile Web browser market and other digital consumer systems with still-unproven market potential. Disagreements about the company's market focus were in part responsible for the departure of Eric Broockman as chief executive officer in May 2001, and a summer layoff of about 10 percent of Alchemy's employees. Jim Moore, the former chief operating office of Crossroads Systems, a storage network systems company, is the current chief executive.

Moore said he could not comment on any impending acquisition or the funding issue. "We've got two products shipping, and just got back first silicon on an unannounced product aimed at the portable, low-power market, all based on the Au1000 core," Moore told EE Times. "We're in an interesting position, because we are in the pre-revenue phase. The market may be affected by recent events, but as far as design wins go there has been no slowdown in intensity by our customers. We're doing great as far as design wins go."

An AMD spokesman said the company is unable to comment, prior to public release, on impending business deals that could impact on the company's stock price. AMD operates a 200-mm wafer fab in Austin, and its president, Hector Ruiz, maintains a home and office here.