NEW YORK (CNN/Money) - Hewlett-Packard Co. has decided to use Transmeta Corp.'s low-power microprocessors in its upcoming "tablet" PC, making it the first U.S.-based computer maker to throw its support behind the Silicon Valley upstart's technology.

HP, which last month completed its $18.7 billion buyout of Compaq Computer, will use Transmeta's Crusoe TM5800 processors to power its Compaq Evo Tablet PC, which the company is expected to introduce late this year.

Santa Clara, Calif.-based Transmeta has been selling its "Crusoe" brand processors since September 2000. They are designed specifically for portable computers and Internet access devices where low-power is important because it improves battery life.

The Crusoe chips achieve their low-power characteristics using a patented technology called "code morphing," which means they use software to translate the instructions typically handled directly by the transistors on other chips.

This allows the Crusoe processors to adjust the clock speed at which they operate depending on the specific task, which Transmeta (TMTA: up $0.36 to $2.73, Research, Estimates) says enables them to use less power and run cooler than competing processors.

Since they were introduced, the Crusoe processors have been making their way into a growing number of computing products, mostly made by Japanese companies. The company currently lists the six largest Japanese notebook manufacturers on its roster of customers, including Toshiba NEC, Fujitsu, Sony, Hitachi and Sharp.

HP (HPQ: down $0.08 to $19.01, Research, Estimates), now the world's second-largest supplier of computer hardware, represents Transmeta's first U.S.-based customer. It also will be the first manufacturer to ship products powered by the Crusoe TM5800, which, at 1 gigahertz, is Transmeta's fastest chip yet.

"We're very excited to get HP as our first big U.S. customer, and to get the size of both HP and Compaq together is a double pleasure for us," said David Ditzel, Transmeta's founder and chief technical officer.

The Evo Tablet PC, which HP plans to target at business users, is comparable in size to a pad of paper and is a fully compatible Windows XP computer.

HP's upcoming tablet PC, a prototype of which is seen here, will be powered by Transmeta's Crusoe processor.

The main difference between tablet PCs and notebook computers is that tablets have touchscreens, similar to those on handheld computers, that enable users to enter data through the screen using a stylus.

PC makers say this new kind of device will help make common business tasks, such as taking handwritten notes in a meeting for later reference or conversion to text and annotating documents or presentations, more efficient.

Because the Evo Table PC is being targeted at business users that spend a lot of time away from their desks, the Crusoe processor was the best choice for power and performance, according to Ted Clark, an HP vice president who focuses on new notebook markets.

"This is a full-function PC, and it's the only PC that you need," Clark said.

"With those requirements, you need good performance for running Windows XP as well as very long battery life," Clark added. "It's the combination of those two requirements that drove us to evaluate and select the Transmeta Crusoe processors."

By landing its first design with HP, Transmeta also gets its foot in the door, putting the company in a stronger negotiating position to get its processors into other HP products.

HP's current line of notebook computers are powered by processors from Intel Corp. (INTC: down $0.85 to $26.77, Research, Estimates), the industry leader, and Advanced Micro Devices Inc. (AMD: down $0.34 to $11.09, Research, Estimates), which ranks second.

Transmeta's shares were trading more than 16 percent higher on Nasdaq at midday Monday, following the announcement. The stock has been pressured over the past year as the company wrangled with a series of problems.

While the Crusoe processors have caught the attention of many in the PC industry, the company has been hard hit by a sharp decline in demand, which has weighed on the financial results of chipmakers across the board.

At the same time, Intel has turned up the heat on its much smaller competitor, aggressively developing and marketing low-power mobile microprocessors and aiming them squarely at Transmeta's target market.

The company also was stung by a number of internal missteps, including several manufacturing glitches, and has undergone several top management changes. In January, the company adopted a shareholder rights plan to defend against a hostile takeover.