The new business unit will oversee all of Sun's semiconductor development in networking, cryptography and high performance computing and will offer its products to both Sun and OEMs.
Sun hopes that the move will increase the number of hardware vendors that provide systems powered by its UltraSparc chips.
Chief executive Jonathan Schwartz compared the move to the success of Solaris. Since its release under an open source licence, Solaris has been certified to run on hardware from a series of vendors including Dell, HP and IBM.
With the pending release of Sun's Advance Processor Line, Niagara II and Rock processors this year and next year, Schwartz boasted that the firm will be able to foster similar market demand for its processors.
Sun's Sparc processor platform has always been available to other system makers. Although it has been adopted by Fujitsu and a few other vendors, it has failed to attract a strong following.
In an attempt to further advance the architecture's appeal, Sun released the design of its T1 processor under an open source licence last year, allowing third-party vendors to create specialised versions of the chip.
The OpenSolaris programme allowed Simply RISC, for instance, to design a low-power single-core version of the chip for use in mobile devices.
The new group will be headed up by David Yen, a 19-year Sun veteran who previously managed Sun's storage group.
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