Intel, HP part ways in Itanium 64-bit processor pact

The move follows disappointing sales for servers based on the processor, according to the report. Intel and HP developed the processor about 10 years, but the chip has been a flop due to delays, cost overruns and lackluster demand.

Under the terms with Intel, HP's Itanium development team, which includes several hundred engineers, will be acquired by Intel and remain in Ft. Collins, Colo., according to the report.

"HP will continue to use Itanium chips in its servers and will pledge $3 billion over the next three years in developing Itanium as a competitor in the $20 billion high-end server market," according to the report. "HP is winding down its other microprocessor architectures and getting out of that business entirely, having settled on using Intel's Itanium, Xeon, Pentium and Celeron processors, as well as Advanced Micro Devices Inc.'s Opteron, Athlon and Sempron chips."