Transmeta is to stop offering engineering services in order to focus entirely on developing and licensing intellectual property.

The move follows a restructuring in early 2005 that cut its chip sales business in order to focus on engineering services and intellectual property licensing.

"Over the past year, the level of activity for engineering services has declined dramatically due to the completion of programs and our customers' declining staffing requirements," said Les Crudele, president and CEO of Transmeta. "As a result, the billable time for our engineers has declined to the point that the projects are no longer sufficient to cover the costs associated with that business."

Most of Transmeta's engineering business came from Microsoft and Sony. Last year, Sony reduced its deal with Transmeta and its contract ends in March.

Transmeta has also completed a services contract with Microsoft on the FlexGo project, a programme that enables customers in developing economies to buy computers and software on a pay-as-you-go basis. Transmeta plans to retain some staff in order to support that programme as it progresses past the trial phase.