Shares of microprocessor technologist MIPS Technologies (Nasdaq: MIPS) spiked hard last week on news that management wants to sell the company to the highest bidder. Goldman Sachs (NYSE: GS) runs the "strategic alternatives" show for MIPS. With that kind of firepower on board, you have to assume that the company is looking for a rich deal -- Goldman's services presumably don't come cheap, as the financial services titan can afford to send small-fry off to advisors with less clout.

MIPS sits on a fat patent portfolio with over 580 claims worldwide, including several key patents in the burgeoning field of 4G mobile networking. That asset alone could be worth more than the company's current enterprise value of $223 million. And then we haven't even weighed the value of MIPS' foray into the Android world, where the company hopes to rival market dominator ARM Holdings someday soon.

Semiconductor blog Bright Side Of News may have found a buyer. According to the site's anonymous sources, Advanced Micro Devices (NYSE: AMD) has been kicking MIPS' tires.

It's unclear whether AMD would be interested in the whole company or just some of its assets, but MIPS would actually make sense under the chip designer's wing. Looking all the way back to the mid-1990s, AMD has a storied history of buying smaller companies to kick-start new product lines: The K6, K7/Athlon, and K8/Athlon 64 architectures all sprung from acquisitions. The current Fusion platform was made possible by engineering talent and intellectual property from graphics house ATI, which AMD bought for $5.4 billion six years ago.

Swallowing MIPS could be another game-changer, and an affordable one at that. In fact, I would expect a bidding war to erupt if AMD or any other chip designer unveils a firm offer of $400 million or less. Goldman would be happy to whip up a feeding frenzy around this severely undervalued company. The one semiconductor company I don't expect to enter that circus would be sector giant Intel (Nasdaq: INTC), which already has a (limping) horse in the mobile race and generally doesn't like to grow by acquisition.

Add MIPS to your Foolish watchlist to keep a close eye on this situation. This could be AMD's ticket into the trillion-dollar mobile market -- an opportunity that not even mighty Intel has cracked yet.