SAN JOSE, Calif. — Sun Microsystems Inc. has chosen Taiwan Semiconductor Manufacturing Co. to make its multi-core processors at 45nm and finer geometries. The decision marks a small shot in the arm for TSMC, and the start for Sun of what could become a partnership to sell its Sparc architecture in the merchant market.

Sun has been looking for a foundry since Texas Instruments, Sun's long-time fab partner, announced it would collaborate with others on its process development at the 45nm node and beyond. Sun's choice of TSMC is not surprising, given the foundry was one of TI's picks for a process technology partner as well.

The server maker currently sells 65nm Niagara CPUs and has announced a 65nm design for Rock, its next-generation high-end CPU. Sun has not yet announced any plans for 45nm processors, however it has several on the drawing board, said Fadi Azhari, director of marketing for Sparc technology at Sun.

"We have had engineering teams working for months now on 45nm designs and we will have multiple 45nm products," Azhari said.

The deal does not include any other system-level ASICs Sun may design for its servers and other products. However, with Ethernet controllers and security accelerators embedded in Sun's latest microprocessors, the company is making a declining number of systems ASICs.

The companies did not disclose financial terms of the deal. However, Sun recently said its sales of Niagara-based systems rose to about $285 million in its latest quarter, a 100 percent increase over sales in the same quarter a year ago.

Sun recently said it will delay until late 2009 releasing systems based on its Rock chip to make sure the device which uses several new parallel processing techniques is thoroughly tested.

The company is making gradual progress toward its goal of becoming a merchant chip provider. The TSMC deal ultimately could assist in that effort.

Initially TSMC has agreed to become part of Sun's OpenSparc program that has established Sparc design centers in six U.S. universities. The centers have a minimum two-year commitment to engage in design research and course work based on Sun's multi-threading technology.

In the future, Sun hopes TSMC will become a sales channel to provide Sparc cores to its foundry customers.

"That's the desired goal long term. The first step is to do university outreach," said Azhari. "They have excellent connections with universities in Taiwan," he added.

Last year, Sun announced it was making its microelectronics division into a separate business unit aimed at developing merchant markets for its chips. It has so far licensed some of its technologies to ARM and Marvell.

"We are putting ecosystem partners in place for development tools and reference designs so we can be a successful merchant supplier," said Azhari

Several years ago, Sun made a major drive to sell its Sparc chips to other computer makers in a bid to establish a market for Sparc-compatible systems. The unit was eventually folded back into Sun's systems group.

With its new standalone microelectronics group, the company is now moving full circle. Chief executive Jonathan Schwartz has pushed the company to embrace the open source movement broadly, even making available open source versions of its processors.