Transmeta has realigned its business around its LongRun2 energy saving technology.

As part of the new strategy, the company revealed a far-reaching partnership with Sony in which Transmeta will dedicate over 100 engineers to work for the Japanese consumer electronics manufacturer.

The engineers will help implement the LongRun2 technology in Sony devices using the new Cell processor and other portable devices.

Transmeta revealed the Sony partnership as part of its quarterly results announcement. The company has promoted vice president of marketing Arthur Swift to chief executive and said that it would lay off 67 employees, or 24 per cent of its current workforce.

Swift said that he plans to build his new company around the "unique" intellectual property behind LongRun2, and believes that there will be large market for the technology.

"Increasing transistor leakage and growing chip power continue to be major challenges facing the semiconductor industry as companies transition to the 90nm generation and beyond," he said in a conference call.

In addition to the Sony engineering deal, Transmeta has sold LongRun2 licences to NEC and Fujitsu.

Transmeta launched a low-power processor for laptop and desktop computers five years ago, promising a dramatic increase in battery life for mobile appliances. The company has never been profitable.

It has axed its Crusoe and 130nm Efficeon lines of processors. The company will continue to produce 90nm Efficeon chips, but has increased prices and is using stricter delivery terms such as advance payment.

Swift acknowledged that, as a result of the new terms, several buyers have cancelled their contracts.

The company claimed to be in advanced negotiations with another partner to reach a deal similar to the one with Sony. The engineering agreements could serve as a model for other customers in the future, according to Swift.