LSI Logic Advances Communications Portfolio

Networking chipmaker LSI Logic has broadened its horizons in the communication space with two acquisitions.

The Milpitas, Calif.-based firm has struck a deal that will let it acquire the product portfolio of Velio Communications for $20 million in cash. Palo Alto, Calif.-based Velio makes high-speed interconnect and switch fabric application specific standard products (like ASICs ), which are used in building communications hardware like routers and switches.

“Velio’s interconnect expertise will enable LSI Logic to offer a more robust portfolio of solutions and quicker time-to-market for competitive products,” LSI Logic executive vice president of Storage and Communications
Components John D’Errico said in a statement. “We are looking forward to
working with Velio’s team in developing significant system advances in the
design of communications platforms.”

The Velio purchase is expected to help boost LSI Logic’s standard
products offerings in its targeted global Communications market. Velio
products include high-bandwidth data switch fabric, TDM STS-1 switch fabric
and related SerDes devices, high-performance interconnect for SAN and
engineering services. In addition, the company will further strengthen its
customer relationships with Velio’s global customer base. The transaction is
expected to close in April.

Beefing up its communications prowess is a good bet, according to LSI execs.
Recent industry statistics estimate chips found in wired and wireless
communications applications, along with consumer, computer and automotive
will rise 27.1 percent in 2004 to $7.8 billion, 19.3 percent to $9.3 billion
in 2005, and 7.6 percent to $10.0 billion in 2006.

LSI also said it has purchased the assets of privately held Fremont,
Calif.-based CrossLayer Networks, which makes Gigabit (Gbit) Ethernet switch
ASSPs. LSI said it would be integrating CrossLayer’s components into its
existing 10/100 Ethernet Switching products targeted for Desktop Gbit
connectivity and networking. Financial terms of the deal were not disclosed.

LSI has been reinventing itself of late. The company sold off its serial
interface chip division to Rambus in December 2003 and
separated its storage systems operations from its mainstream semiconductor
business in November 2003 to focus separately on storage area networking

In a separate statement, LSI said it is on track to deliver a 4Gbs Fibre
Channel host bus adapter product family with single and dual port versions
with a PCI-X bus interface in mid-2004.

The company said the new products will be bundled with LSI’s MyStorage
management software and support 1-2-4GBs operations. The adapters will be
completely compatible with all the existing operating system drivers for
Windows, Linux, Solaris, Netware, and Apple OS 10, the company said.

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