SAN FRANCISCO - Sun Microsystems Inc. will begin building a line of servers that run on chips from Intel Corp. and will receive Intel's endorsement of Sun's Solaris operating system, executives from both companies said yesterday.

The long-term alliance, announced by Sun chief executive officer Jonathan Schwartz and Intel CEO Paul Otellini, was seen as a sizable victory for both Santa Clara companies as they fend off threats from competitors in the high-margin server market.

Sun, which plans to begin shipping the Intel-based products in the first half of this year, said the companies were working on ways to improve and expand the market presence of Solaris.

Both executives stressed the collaborative nature of the deal, which teams up two companies known for their heavy investment in research and development even during tough financial times.

"This is a market-changing event," Schwartz said onstage with Otellini.

"This totally changes the perspective the customer has on how they can do business with Sun and similarly how they can do business with Intel."

The deal marks a major design win for Intel. The world's largest chip-maker has been fighting to reverse plunging profits and regain market share lost to archrival Advanced Micro Devices Inc.

AMD stole more than 5 percent of the overall chip market from Intel in the last year, according to Mercury Research.

For the last few years, Sun has relied exclusively on AMD chips for servers based on the popular x86 architecture, or design, used in many personal computers and servers.

Intel once provided chips to Sun for those same systems, but its chips were seen as consuming too much energy and were pushed aside in favor of AMD's offerings. Under the new partnership, Intel will again begin providing chips for those servers.

The alliance also is a sizable victory for Sun as the company continues its long climb back to profitability after the dot-com collapse and seeks more mainstream adoption of its servers and software products.

The company, which is scheduled to report its quarterly financial results today, has lost more than $5 billion since 2002, after tech-related spending dried up and demand plummeted for high-priced servers like Sun's.