Sun Microsystems has taped out its chip called Niagara on Tuesday, according to a report from News.com web-site, indicating that the company seems to be on-track to start commercial shipments of its next-generation microprocessor in 2006.

The micro-architecture of Sun’s processor code-named Niagara was originally developed outside of Sun by Afara Websystems, a startup that was bought by the Santa Clara, California-based server company in 2002. The Niagara chip includes eight processing engines, or cores, each of which is capable of handling four threads simultaneously. Sun variously calls this approach “throughput computing” or “chip multithreading”, News.com notes.

Reportedly, Sun officially confirmed the fact of tape-out, which means that the company has sent the design of its Niagara processor to the chip making foundry that belongs to Texas Instruments, who also produces the UltraSparc products. This essentially means that the whole architecture and design of Niagara are finalized. It usually takes about a year for microprocessor companies to verify the actual chip and correct possible issues within its design or architecture.

Along with Niagara, its high-end flavour code-named Rock has been in development. It is usually reported that the Rock is a derivative of Niagara with bolstered computing power. The Niagara and Rock are expected to go into commercial servers by Sun in 2006 and 2007 respectively. Later in 2004 the company will release its UltraSparc IV+ chips aimed at the high-end of market segments. It is not clear if Sun plans any CPU launches for 2005.

The legendary server company of the eighties and nineties, Sun Microsystems started to lose market share in the past several years after its processors, such as UltraSparc III, faced delays and appeared to be slower compared to competitors designed by companies like IBM or Intel. As a consequence of financial failures, Sun had to abort the development of its UltraSparc V and Gemini microprocessors.

In addition to high-end servers, the company also makes volume mainstream server machines based on processors from Intel and AMD. While the Gemini chip was originally designed to fit into such machines, its cancellation may indicate that Sun’s own processor division will concentrate on higher-margin central processing units for expensive servers, while the mainstream field will be served by offerings by other chipmakers.