Sanmina to scoop up server maker

Newisys, a start-up hoping to popularize the Opteron chip from Advanced Micro Devices, is being bought by contract computer manufacturer Sanmina-SCI, according to sources close to the company.

The Austin, Texas-based server start-up--founded by a number of executives from IBM, including CEO Phil Hester--sells servers built around Opteron, which debuted in April. The company also licenses its designs and intellectual property to other manufacturers. The transaction is expected to be announced soon, sources said, although the final form of the transaction is uncertain. Sanmina may buy the company outright, or merely buy the valuable parts and leave a corporate shell. Either way, the intellectual property and engineering talent are going to Sanmina, sources said.

Newisys and Sanmina declined to comment. Although its servers have received high marks from those who have tested them (Microsoft showed one onstage at its WinHEC conference in May), Newisys has been facing the grinding pressure of trying to break into the hardware business. Corporate buyers often examine and test new products for months before buying anything, and they generally prefer to deal with established manufacturers.

"They designed a very impressive product that was a little ahead of the market for where AMD processors were," said Nathan Brookwood, an analyst at Insight 64. Brookwood also noted that something of a mismatch existed between the company's servers and the audience for them.

News source: C|net

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