Sun said it will use Intel's Xeon chips to power some of its servers, the powerful networking computers that it sells to businesses and other institutions. Sun also uses AMD's Opteron server chips.

Sun plans to start using the Intel architecture in the first half of this year. Under the alliance, which includes joint engineering, design and marketing efforts, Sun will eventually deliver a series of Intel-based systems that support Solaris, Windows and Linux operating systems.

Stifel Nicolaus analyst Cody Acree said in a note to clients before the announcement that he expected the market to react to Intel's market share gain, even as he predicted that the financial impact to each chip supplier would be minimal.

"Up until recently, AMD was consistently gaining share in most all markets while Intel struggled. Now, AMD has missed the last two quarters, Intel appears to be steadily improving, and now Sun is giving Intel obvious market share," Acree said.

Shares of Sun were down 8 cents, or 1.39 percent, at $5.69, while shares of Intel were up 2 cents at $20.83 after the announcement.

Shares of Intel rival AMD were down 33 cents, or 1.9 percent, at $17.40 on the New York Stock Exchange.