Feeds

LSI Agere merger creates storage, networking and CE chip giant

'Combining of interests'

The essential guide to IT transformation

Long standing semiconductor specialist LSI Logic, which leads in the provision of chips which underpin enterprise high end storage systems, has merged with Agere Systems, a company with a similar product set, in a deal valued at around $4bn.

LSI stock fell slightly on the news and today the company is valued at $3.73bn while Agere has risen in value to $3.36bn, in line with the transaction price. LSI will be the surviving brand name and the company also made moves to sweeten the deal by announcing a $500m stock buy back.

Agere is mostly about network processors, gigabit ethernet switches, DSPs and network attached storage, while LSI is in all of those businesses, plus it offers DVD and DVR processor chips, advanced codecs for its DSPS and was, until recently, providing the chips that underpinned the iPod MP3 media processor for PortalPlayer. This deal was lost earlier this year to Samsung and had a $100m-plus knock on effect at LSI Logic which physically prepared the PortalPlayer chip masks for United Microelectronics in Taiwan to build.

LSI is also a Mobile DTV Alliance member, so was clearly targeting DVB-H and other handset designs, probably with its DSP chips.

The two have entered a definitive merger agreement under the terms of which Agere shareholders will get 2.16 LSI shares for each share they own.

The companies have a combined revenue of $3.5bn for the past year operate in 20 countries, and employ 9,100 staff and have 10,000 issued and pending US patents.

The merger looks like a straight combining of interests in and around storage, which will now dwarf the CE chips that LSI made, which could mean that this may be spun out later to allow the chip company to further specialise on enterprise, rather than consumer chips.

Copyright © 2006, Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here.

Boost IT visibility and business value

More from The Register

next story
Pay to play: The hidden cost of software defined everything
Enter credit card details if you want that system you bought to actually be useful
Shoot-em-up: Sony Online Entertainment hit by 'large scale DDoS attack'
Games disrupted as firm struggles to control network
HP busts out new ProLiant Gen9 servers
Think those are cool? Wait till you get a load of our racks
Silicon Valley jolted by magnitude 6.1 quake – its biggest in 25 years
Did the earth move for you at VMworld – oh, OK. It just did. A lot
VMware's high-wire balancing act: EVO might drag us ALL down
Get it right, EMC, or there'll be STORAGE CIVIL WAR. Mark my words
Forrester says it's time to give up on physical storage arrays
The physical/virtual storage tipping point may just have arrived
prev story

Whitepapers

Top 10 endpoint backup mistakes
Avoid the ten endpoint backup mistakes to ensure that your critical corporate data is protected and end user productivity is improved.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Backing up distributed data
Eliminating the redundant use of bandwidth and storage capacity and application consolidation in the modern data center.
The essential guide to IT transformation
ServiceNow discusses three IT transformations that can help CIOs automate IT services to transform IT and the enterprise
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.