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Seagate in surprise $450m LSI Flash gobble

Will they, won't th - oh wait, yes they will

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Wow! Didn’t see that one coming; Seagate has scooped up the LSI flash business from Avago, rewriting the flash product supply business at a stroke, and speeding the concentration of flash product supply into fewer hands.

Avago bought LSI in December 2013 for a cool $6.6 billion. Now Seagate will buy LSI’s flash biz, the Accelerated Solutions Division (ASD), and its Flash Components Division (FCD) for $450 million in cash.

This kind of acquisition by Seagate has been widely expected, and indeed recommended, not least by us here.

But Seagate had been so quiet on the issue that people were beginning to think it was happy to stick with spinning rust and punt it to cloud suppliers for their storage needs.

Seagate had apparently stood by while competitor WD bought a string of flash companies, such as Virident, sTec and Velobit, and added them in to subsidiary HGST’s Intel-based Ultrastar SSD business.

Until now Seagate’s only flash interest was its Pulsar SSD line. Now it has a line of Nytro PCIe flash and Sandforce controllers. LSI had no significant tie up with a flash foundry and neither did Avago. Seagate, however, has a relationship with NAND flash fab leader Samsung, so that hole is filled.

LSI claimed it was the second largest PCIe flash card supplier after Fusion-io, and Seagate’s acquisition statement repeats that claim. It also says that the FCD business “is driving a multi-product roadmap to address volume markets.”

Seagate chairman and CEO Steve Luczo was cock-a-hoop:

“LSI’s ASD business has the broadest PCIe flash product offering and intellectual property in the market today and the FCD business has best-in-class SSD controllers with proven support for a wide range of applications. This acquisition immediately boosts Seagate’s range and depth of flash storage capabilities today, and these teams bring to Seagate the expertise to accelerate our roadmap in this important and growing market.”

The company can punt the Nytro and Sandforce product families out through its channels and so pump up their volume.

What Seagate doesn’t have is PCIe flash caching and storage memory software. We wouldn’t be surprised to see it pick up a supplier in this area to complete its PCIe flash card hardware and software offering.

Seagate expects at least $150 million in revenues in its fiscal 2015 from the two LSI flash operations. The acquisition is expected to closer in the third quarter of this year. ®

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