AMD has sold its Alchemy line of microprocessors to Raza Microelectronics, to enable it to focus on its more widely used x86-based chips.
The Alchemy chips are Mips-based and are designed for low power devices such as handheld PCs or portable media players.
Software written for x86 platforms cannot run on Mips systems and vice versa.
AMD has previously said it wanted to concentrate on the much larger x86 market, particularly as that is where it is now taking market share from Intel.
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Mips specialist Raza already supplies processors for networking and security applications, and hopes that by adding the Alchemy range it can build up its share of the consumer market.
The Alchemy products only form a small part of AMD’s business and the financial terms of the deal have not been disclosed.
AMD plans however to invest in Raza as part of a new strategic relationship.
The two companies plan to work together on AMD's Torrenza project, which is designed to open up AMD's Opteron processors to third party developers.