The appliances will be targeted at users looking for a Linux-based device for accessing the Internet, powered by an x86-compatible processor, S3 said in a statement.
S3 did not indicate when the appliances would ship, and S3 executives could not immediately be reached for comment.
Crusoe is a processor designed mainly for use in mobile devices. It uses "code morphing" technology, converting instructions written for x86-type processors such as Intel's Pentium into VLIW (very long instruction word) instructions that can be read by Crusoe's underlying hardware.
One of the Crusoe chips, the TM3120, was designed specifically for Internet appliances running the Linux OS.
Linus Torvalds, who created Linux, is one of the most famous employees of Transmeta, which was founded in 1995 but only unveiled its first product this week.
S3 makes products for both the PC and Internet appliance markets. Last year, it purchased Diamond Multimedia, which makes the Rio MP3 digital music player, as well as graphics accelerators and a line of home networking products.