Sun sealing up deal for Montalvo

Here's one secret stealthy chip start-up Montalvo has had trouble keeping quiet: it's being bought. The formal announcement is expected soon.

Sun is putting the finishing touches on its purchase of stealthy chip start-up Montalvo Systems.

As first reported by CNET, Sun started conducting serious negotiations with Montalvo at the beginning of the month. The formal announcement is expected soon.

Montalvo has designed a low-power, multiple core chip for portable computers. The chip can run the same software as processors from Intel and Advanced Micro Devices, but consume less power. The trick is that the cores on the chip are asymmetrical: some are high-powered for complex problems while others that handle basic tasks consume little power.

The market for Intel-compatible chips is immense, but breaking into it isn't easy. Intel has a huge manufacturing division and a top-flight design team. Many companies have tried and most have failed. Montalvo has had problems even getting samples of its chips to work. (Fujitsu makes the chips for Montalvo.) Even AMD, no slouch in those departments, chronically goes through periods of unprofitability.

The company has also burned through an incredible amount of money. It has raised more than $73 million in VC funds but has been making the rounds looking for more. VCs contacted by earlier this year said they passed: the company was burning way too much cash and success looked daunting.

Still, the company has an interesting patent portfolio, some have said. Sun is likely buying the company for the intellectual property and the engineering talent.

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