Sun Separates Chip Group

Sun is also working on a new 16-core processor, dubbed Rock, which is expected to ship in 2008.

Tom Engle said the company was not ready to announce any deals with companies that planned to incorporate Sun's chips inside their products at this point. But she said that separating the chip group as its own business unit will allow Sun to better focus on outside business opportunities.

"These engineers are living and working inside Sun today and have been considering their primary customers to be Sun. Now they get to branch out beyond there," Tom Engle said.

Yen has been with Sun for nearly 20 years and was involved in the release of the Niagara chip.

Yen's job heading up Sun's storage business will go to Senior Vice President Jon Benson. As part of the transition, Sun's networked attached storage and storage appliance businesses will report to John Fowler, who manages Sun's Systems business.

Shares of Sun, which finished Tuesday's regular trading session down 2.6% at $6.06, were down a penny in extended trading.