Upstart processor vendor Transmeta said today that direct vendor Gateway will use its Crusoe chips and Mobile Linux operating system in forthcoming Internet appliances the hardware vendor is developing with America Online.

Gateway and AOL will use the Crusoe processors and Mobile Linux in appliances aimed at providing consumers with easy access to the Internet, Transmeta said in a statement.

Terms of the agreement were not disclosed.

The first Gateway/AOL Net appliances are scheduled to arrive late this year, the companies said when they unveiled the joint effort at the Internet World trade show held in Los Angeles in April.

AOL and Gateway were among a group of investors that injected around £50 million into the formerly secretive chip developer in April.