Sun, Intel team up on server chips

The new alliance between Sun Microsystems and Intel joins two storied Silicon Valley companies with recent financial woes in a battle for the lucrative market for corporate servers and software, an Associated Press report said.

The Associated Press report said Sun, a one-time dot-com darling that has lost more than $5 billion since the tech collapse, would begin building and shipping later this year servers and workstations that run on Intel processors.

Intel, trying to reverse plunging profits and market-share losses to archrival Advanced Micro Devices, will officially endorse Sun's Solaris operating system in return, the report said.

The Associated Press report also quoted analysts as saying that Intel's backing will be crucial in Sun's effort to gain more widespread adoption of its servers and software.

And Sun's embrace of Intel chips marks a timely design win for Intel, whose processors were shunted aside by Sun several years ago in favor of chips from AMD.

But Intel has revamped its product line with a new chip design to boost performance while giving off less heat, and analysts said deals like the one with Sun reflect a growing demand for Intel's new offerings, the report said.

The CEOs from both companies, Jonathan Schwartz with Sun and Paul Otellini with Intel, jointly announced the deal in San Francisco, the report further said.

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