By John G. Spooner; special to ZDNet News . . .

Advanced Micro Devices will use a little alchemy to compete better with Intel and other chipmakers in the portable computing devices market.

AMD said Wednesday that it would acquire Alchemy Semiconductor, maker of MIPS-based chips for devices such as PDAs and MP3 players. MIPS is processor architecture designed to offer high performance and low power for PDAs, networking and other non-PC devices.

AMD will also establish a Personal Connectivity Solutions business unit for non-PC connectivity devices. William Edwards, former CEO of Hesson Labs, will be named general manager of the new unit.

The acquisition of Austin, Texas-based Alchemy is expected to be completed during the first quarter of 2002. Financial terms were not disclosed.

AMD has a large presence in the market for embedded non-PC computing devices, with its X86-based processors. However, it does not have a processor for small, portable computing devices such as the PocketPC.

The Alchemy purchase and subsequent new business unit will allow AMD to offer products that compete with Intel's StrongARM and other popular offerings, including NEC's VR-series and Hitachi's SH family. These three processors are found in many of the most popular Pocket PC-based PDAs such as Compaq's iPaq.

AMD has been eyeing personal connectivity for some time. Shortly after his appointment in early 2000, AMD President Hector Ruiz told reporters that PDAs and other devices would be akin to a third leg of a stool for AMD, complementing the chipmaker's efforts in PC processors and flash memory.

“By joining forces, AMD and Alchemy can supply the building blocks of connectivity–computing solutions from Alchemy coupled with wired and wireless technologies and flash memory devices from AMD,” Ruiz said in a statement Wednesday. “Alchemy's MIPS-based solutions provide the ideal combination of high performance and low power for the Internet access device market.”

One of Alchemy's more potent products is its Au1000, a processor designed for PDAs, networking equipment and thin clients running Linux and Windows CE operating systems.

The Au1000 chip, launched last year at 500MHz, out-clocks Intel's StrongARM chip, which runs at 206MHz. The Au1000 will also compete directly with Intel's forthcoming Xscale processor, its StrongARM follow-on, in both clock speed and power consumption.

Xscale chips are expected this spring at speeds of about 400MHz.

When running at 400MHz, the Au1000 draws 500 milliamps of power or 900 milliamps at 500MHz, the company has said. The 32-bit chip is based on the 32-bit MIPS32 processor architecture, licensed from MIPS Technologies.

Alchemy also offers the Au1500, a similar chip designed for networking and communications.

Alchemy was founded in 1999 by Rich Witek and Greg Hoeppner, two former chip engineers from Digital Equipment who left the company when Intel took charge of StrongARM in a patent suit settlement in the fall of 1997. Both Witek and Hoeppner will join AMD, reporting to Edwards.

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