Update: Sun confirms it's buying Montalvo

Sun Microsystems has confirmed it bought Montalvo Systems, but probably for a lot less than venture capitalists plunked into the company.

"Montalvo's assets will be integrated into Sun's Microelectronics business unit. We believe acquiring these assets will enhance the current and future products we are developing and expect them to contribute to future generations of Sun's microprocessor technology which will in turn drive additional differentiation for Sun's Systems products, a company representative wrote in an e-mail.

"We are not disclosing the terms of the deal as it is not material with respect to earnings per share," the representative continued.

Sun sealed the deal on April 21, but the company did not put out a press release then, according to its Web site. Earlier today, news sites were reporting that the deal was close to being signed. Sun later coughed up the confirmation.

Montalvo designed, but never quite produced, an energy-efficient multicore chip that runs the same software as processors from Intel and Advanced Micro Devices. Venture capitalists put more than $73 million into the company. Montalvo, however, burned through that and has been looking for more money. Subsequent investors balked. Negotiations between Sun and Montalvo were reported on News.com earlier this month.

The Register has reported that Sun bought Montalvo for close to $5 million. Montalvo has had trouble producing chips, but it has some interesting patents.

Sun is likely interested in the patents and the engineering team. Montalvo employs noted chip designers like Greg Favor. It is less likely that Sun will produce a chip that competes with Intel and AMD. Sun uses Intel and AMD processors in its servers and doesn't own its own chip factories, like the other companies. Owning your own factory is often a strategic advantage in the chip world. Companies that have tried to break into this market without their own factories have mostly failed.

Talk about a week for crazy chip acquisitions. Apple bought PA Semi, which makes an energy-efficient chip for servers, earlier this week. While Sun continues to make and design its own chips, Apple does very little of that work. So it might be that Apple is trying to build up a patent portfolio.