Electronics Production | March 08, 2006

LSI to focus on IT-storage markets

LSI has announced its plans to change its business focus to intensify its operations within storage and consumer markets.
LSI Logic Corporation announced plans to focus its business on growth opportunities in the information storage and consumer markets, increasing associated research and development (R&D) investments, while redirecting R&D from non-core areas and reducing associated selling, general and administrative (SG&A) expenditures.

Executing a new strategy that adopts a strong market orientation, the company intends to strengthen investments in growing markets where it has a significant, scalable presence and the ability to sustain differentiation. The strategy also calls for trimming non-core areas through decreased investment or divestiture.

"By focusing our resources on fewer markets, where our deep insight and unique silicon-to-systems capabilities can be fully leveraged, we anticipate delivering greater value to customers," said Abhi Talwalkar, LSI Logic president and chief executive officer. "Today, we are taking specific actions to significantly enhance our ability to target growing opportunities in the storage and consumer markets, where rapid information growth and the surging consumption of digital content play to our strengths in providing differentiated market solutions that incorporate silicon, systems and software."

LSI is a leading provider of technologies that create, store and consume digital information and content. Providing a broad range of products including custom silicon, standard silicon, system building blocks and software, the company is a market share leader in enabling information storage solutions for enterprises and media processing solutions for todays digital lifestyles.

Consistent with its increased focus on storage, the company has canceled its previously postponed plan for an initial public offering of its wholly-owned storage systems subsidiary, Engenio Information Technologies, Inc.

LSI intends to fund additional R&D investments in its focus markets by redirecting ongoing investments in its RapidChip® platform ASIC technology, and by selling its ZSP® digital signal processor (DSP) unit.

As a result, the company will cease further RapidChip development and realign its custom silicon capabilities to more deeply serve customers in the storage and consumer markets. RapidChip customer designs currently in production or under development will continue and are not affected by this action.

The companys ZSP unit, which provides licensed ASIC technology to the broadband and wireless communications markets, is expected to be sold. No timeframe for completion of this transaction is being announced at this time.

"RapidChip technology targets a broad-based set of requirements across a wide range of industry segments and applications, while our DSP technology has been primarily deployed in areas outside of our focus markets," said Jeff Richardson, LSI Logic executive vice president, Custom Solutions Group. "Further pursuit of broad-based ASIC opportunities in non-focus areas is inconsistent with our strategy. Going forward, our custom silicon resources will be concentrated to serve customers more fully within our chosen markets."

"Through the strategy and actions we are executing today, we expect to drive increasing value for LSI and our customers," said Talwalkar. "The combination of keen market focus, rich technology portfolio, and our silicon, systems architecture and software expertise will create greater synergy and opportunity to build deeper, more valuable customer engagements."
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