Oracle Corp Chief Executive Larry Ellison dispelled speculation that he will divest the hardware business of Sun Microsystems Inc , which his company plans to buy for more than $7 billion.

Ellison shook up Silicon Valley last month by unexpectedly signing a deal to buy Sun, the world's No. 4 maker of server computers and also the developer of Java and Solaris software.

Some analysts have speculated that Oracle, the world's largest database software maker, actually wants Sun's software assets and that it might eventually sell off the hardware business.

We are definitely not going to exit the hardware business, Ellison said in an email interview with Reuters. If a company designs both hardware and software, it can build much better systems than if they only design the software. That's why Apple's iPhone is so much better than Microsoft phones.

Ellison also said he plans to boost investment in Sun's SPARC high-end line of microprocessors, which it uses in its Unix computers.

We think designing our own chips is very, very important. Even Apple is designing its own chips these days, he said.

(Reporting by Jim Finkle; Editing by Richard Chang)