Hong Kong-based chip supplier Culturecom Holdings Ltd. has begun shipping a microprocessor intended for use by the Chinese market.

Culturecom’s V-Dragon embedded processor is Linux-based and features CPU character generating technology, which it claims is able to generate about 32,000 (extendable to over 50,000) traditional and simplified Chinese characters, and is also capable of supporting ASCII characters. Such character support is an essential inroad to the domestic Chinese market.

Culturecom has licensed the Midori version of the Linux operating system from Transmeta Corp. Transmeta designs ultra-low power microprocessors aimed at the mobile and embedded computer space. Culturecom also professes to have links with IBM Corp., citing it as a co-developer of V-Dragon and provider of technical support.

Last week Culturecom saw trading of its shares halted on the Hong Kong stock exchange pending an announcement further detailing their agreement with Transmeta. Investors have speculated Culturecom itself decided to suspend trading, while Asian media reports confirm Culturecom has legitimately licensed the technology from Transmeta.

The V-Dragon processor is being aimed embedding in products such as handheld devices and tablet PCs. The company believes it has a much larger market potential than traditional desktop PC products.

“This V-Dragon Midori Linux embedded architecture is a leading system of its kind in the China market and is in line with the Chinese government’s IT policy,” said Frank W.T. Cheung, chairman of Culturecom, in a statement. “Culturecom is confident it will make a significant impact on market share with this new development.”

Culturecom said that on the chip’s first day of pubic release it signed agreements for the sale of about 100,000 units, and letters of intent related to the sale of about 200,000 units.

The chip is built on an SOC architecture and features an integrated 10/100Mbit/sec. Ethernet interface (EMAC) with dedicated DMA module (MADMal); 64-bit read and write data bus address pipelining; full-speed USB host controller for four USB ports; supports 1GByte SDRAM; is compliant with OHCI v1.1 specification; and features attached ADC-SAR for touch pad and sound detection applications.