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Transmeta Announces Processor Technology License And Sale Agreement For The Chinese Market Agreement to Deliver Transmeta Crusoe and 130-nanometer Efficeon Processor Technology to Culturecom

SANTA CLARA, CA (May 31, 2005) - Transmeta Corporation (NASDAQ: TMTAE), the leader in efficient computing technologies, today announced the signing of asset purchase and license agreements with Culture.com Technology Limited (Culturecom), a fully owned subsidiary of Culturecom Holdings Ltd (343.HK), a Hong Kong based technology company. This transaction is subject to the completion of a number of conditions, including the receipt of a technology export license from the U.S. Department of Commerce, certain other third party consents and the signing of a related services agreement with Transmeta.

Pursuant to these agreements, Transmeta has agreed to sell, through a combination of asset purchase and licensing agreements, its Crusoe(TM) product line to Culturecom. As part of this agreement, Culturecom will also license Transmeta's 130-nanometer Efficeon(TM) technology to make and sell Efficeon-based products in China. In consideration, Culturecom will make up-front cash payments totaling $15 million to be escrowed pending the close of the transaction. In addition to the up-front payments, Culturecom will also pay royalties to Transmeta on sales by Culturecom of Crusoe and Efficeon products. The transaction is scheduled to close in the fourth quarter of 2005.

"This engagement helps deliver Transmeta processor technology to the rapidly growing Chinese computing market through Culturecom, an established provider of Chinese-language technology solutions," said Arthur L. Swift, president and chief executive officer of Transmeta. "This relationship is another example of Transmeta's commitment to deploy our innovative technologies through licensing and synergistic engineering services."

As part of this transaction, Culturecom will also enter into an engineering services agreement with Transmeta to facilitate the transfer of the technology. Previously, Culturecom licensed Transmeta's Midori Linux for the development of embedded applications and, in conjunction with that license, Transmeta acquired, and continues to own, a minority equity stake in Chinese 2 Linux (Holdings) Limited, an affiliate of Culturecom.

"This agreement expands Culturecom's ongoing business of providing processors with embedded Chinese language technology," said Frank W. T. Cheung, chairman and chief executive officer of Culturecom. "Transmeta's unique x86-compatible processor architecture coupled with Culturecom's Chinese language technology will facilitate the adoption of modern computing technology by mainstream Chinese consumers."

Transmeta will continue to manufacture its Crusoe and 130-nanometer Efficeon products until the transaction closes, and will complete fulfillment of existing backlog in the subsequent transition period. As previously announced, Transmeta will continue to support its 90-nanometer Efficeon processors for Transmeta's strategic partners.

About Transmeta Corporation

Transmeta Corporation develops and licenses innovative computing, microprocessor and semiconductor technologies and related intellectual property. Founded in 1995, Transmeta first became known for designing, developing and selling its highly efficient x86-compatible software-based microprocessors, which deliver a balance of low power consumption, high performance, low cost and small size suited for diverse computing platforms. We also develop advanced power management technologies for controlling leakage and increasing power efficiency in semiconductor and computing devices. To learn more about Transmeta, visit www.transmeta.com.

Safe Harbor Statement

This release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements speak only as of the date of this release, and we will not necessarily provide updates of our projections or other forward-looking statements. Investors are cautioned that such forward-looking statements are subject to many risks and uncertainties, and may differ materially or adversely from our actual results or future events. Important risk factors that could have material or adverse effects on our results include satisfaction of the closing conditions to the transaction, the expected timetable for completing the transaction, general economic and political conditions, specific conditions and volatility in the markets that we address, difficulties or delays in implementing our restructuring plan, the potential loss of key technical and business personnel resulting from our restructuring plan, practical challenges in modifying our business model, our ability to satisfy the continued listing requirements of the Nasdaq Stock Market, the adoption and market acceptance of our products and technologies by current and potential customers and licensees, our inability to predict or ensure that third parties will license our technologies or use our technologies to generate royalties, the rescheduling or cancellation of significant customer orders, difficulties in developing or manufacturing our products in a timely and cost effective manner, our dependence on third parties for sourcing materials and providing manufacturing services, intense competition and competitive pressures, the ability to enter strategic collaborations or raise financing on satisfactory terms, patents and other intellectual property rights, and other risk factors. We urge investors to review our filings with the Securities and Exchange Commission, including our most recent reports on Forms 10-K, 10-K/A and 10-Q, which describe these and other important risk factors that could have an adverse effect on our results. We undertake no obligation to revise or update publicly any forward-looking statement for any reason.

Transmeta, Efficeon, LongRun2 and Crusoe are trademarks of Transmeta Corporation. All other product or service names mentioned herein are the trademarks of their respective owners.

Source: http://investor.transmeta.com/ReleaseDetail.cfm?ReleaseID=164752