LSI Logic carves out consumer biz to Magnum Semi

June 27, 2007 – In a move to further reduce its overhead and narrow focus six months after ponying up $4 billion for smaller rival Agere Systems Inc., LSI Logic Corp. has agreed to sell its consumer products business, including the DoMiNo, Domino and Zevio architectures, products and related IP, to Magnum Semiconductor Inc. Terms were not disclosed, although Magnum said it will get help from private equity investment to fund the deal.

With the move LSI Logic gets even leaner and more focused on its storage systems and semiconductors targeting storage, networking and mobility applications. It also will trim $290-$310 million from GAAP operating expenses in 3Q07 and another $275-$295 million in 4Q, plus “further progress on operating expenses in 2008.” About 900 positions (~13% of nonproduction workforce) will be eliminated (though Magnum says it will “offer employment to a significant number” of those employees).

“We are accelerating our timetable for aligning the resources of the new LSI with market opportunities and focusing on those markets where we possess leading technology and sustainable competitive advantages,” said Abhi Talwalkar, LSI president and CEO, in a statement.

Meanwhile, for Magnum, the additions bolster its lineup for chips, software, and platforms for consumer entertainment systems, including A/V chips, digital TV, plus high-definition media processing and low-power graphics. “By taking this step we bring in people, talent and products that will accelerate our revenue ramp and our R&D efforts. Magnum now becomes one of the leaders in audio/video chips and software for the consumer electronics market. We also gain access to the market for professional broadcast solutions that deliver content to consumers,” stated Jack Guedj, president and CEO of Magnum Semiconductor.

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