Sun to Use Intel Chips in Servers

U.S. computer maker Sun Microsystems Inc. will buy computer chips for use in its server systems from Intel Corp., the company said Monday.

Under the agreement Sun will buy Intel’s new energy-efficient Xeon microprocessors in its fast-growing line of x86 servers, several published reports said.

Sun Chief Executive Jonathan Schwartz and Intel’s Chief Paul Otellini were to announce the deal together.

The deal is seen as a blow to Intel rival Advanced Micro Devices Inc.

Sun, of Santa Clara, Calif., has used AMD’s Opteron chips in its servers exclusively in recent years.

Sun will keep using AMD chips in some of its computers, The Wall Street Journal reported. Competitors Hewlett-Packard Co., International Business Machines Corp. and Dell Inc. also have dual-supplier strategies.

Sun shares were down 7 cents or 1.21 percent to $5.70 a share ahead of the announcement. Intel shares dropped 5 cents or 0.24 percent to $20.77. AMD shares fell 29 cents or 1.64 percent to $17.44.