Global Sources
EE Times-Asia
Stay in touch with EE Times Asia
?
EE Times-Asia > Memory/Storage
?
?
Memory/Storage??

Transformed LSI shifts to implementation mode

Posted: 16 Jul 2008 ?? ?Print Version ?Bookmark and Share

Keywords:Abhi Talwalkar interview? 10GbE? Agere Systems merger? storage and networking? hard disk industry?

Talwalkar: I claim the transformation is behind us, and we are in a mode of execution.

Abhi Talwalkar has been a busy guy.

In his first 24 months as president and CEO, he was part of five acquisitions, two divestitures, a $3.5 billion merger and a radical restructuring in the manufacturing strategy of LSI Corp., one of the icons of Silicon Valley. But his work is far from over.

LSI is a provider of innovative silicon, systems and software technologies. The company offers a broad portfolio of capabilities and services including custom and standard product ICs, adapters, systems and software. But for a company now focused on storage and networking markets, it has a glaring lack of standard Ethernet products.

Plenty of startups are prime acquisition targets to fill the need, including 10GbE specialists such as Aquantia, Chelsio, Solarflare, ServerEngines and many others. Alternatively, the growth could come organically because LSI has many of the key GbE and 10GbE capabilities in-house in its still active ASIC group.

Just what will happen and when is unclear. But Talwalkar is clearly exploring his options, even if he isn't willing to provide much detail on his thinking at this stage.

Fabric convergence
Networking silicon "is an area of development and we are working on making it a bigger part of our business," said Talwalkar. Whether he wants a portfolio of standard Ethernet products to go up against the Broadcoms and Marvells of the world is still unclear.

"It's not something we have decided on," he said. "We're looking at that market overall in terms of data center fabrics. You can't be participating in that market and not see what's going on in fabric convergence," he added, referring to the move to put more traffic over fewer networks.

Talwalkar is quick to point out that LSI currently has multiple ASICs in the works with customers building Fibre Channel over Ethernet products, one of the key directions in networking convergence for companies such as Cisco Systems Inc. and IBM Corp. The company is also working on GbE and 10GbE ASICs.

"It's a question of whether we want to participate in Ethernet in a broader way," said Talwalkar. "Right now, our plan is to participate through our custom approach."

Market timing is part of the equation. "There have been hundreds of millions invested in the 10GbE curve that has been in front of us for the past seven to eight years, but it is much more real now than ever in terms of deployments of switches and intelligent server cards in the next 12-24 months," he said.

Networking represents just 20 percent of LSI's business today, the rest coming from its storage division. Having a strong 10GbE offering could bolster both groups strategically, said Linley Gwennap, principal of market watcher The Linley Group. That's because the storage networking sector is one of the fastest growing segments in business computing today.

Merger gains
Much of today's LSI is the result of the $3.5 billion merger with Agere Systems Inc., the former semiconductor unit of AT&T. Agere added read channel chips to LSI's position in hard disk, RAID and storage interface components. It also brought a wealth of networking chips both in datacom products for business computing as well as telecom parts for service providers.

After the merger, LSI sold off Agere's cellular baseband business to Infineon for $446 million. It separately bought Infineon's hard disk chip business, giving it pre-amp components and some of its first design wins with Hitachi Global Storage Technologies.

"Every one of the top hard disk makers is a customer of ours today," he said, noting hard drive silicon is a growing multibillion dollar market and the only storage market where LSI participates but is not the number one player. "Our market share in this sector is in the mid to high '20s, so we are far from saturated," he said.

Despite consolidation, both among drive makers and their suppliers, "the hard disk industry is probably healthier today than it has been for a long, long time," Talwalkar said. "Solid-state drives will play a role, but the hard disk industry is not going away and will probably continue growing at 12-15 percent a year in terms of units," he added.

With its strategies in storage and networking starting to emerge, Talwalkar claims LSI is entering a new phase of its life since he was brought on in May 2005 by the company's founder Wilf Corrigan to lead a corporate restructuring. Talwalkar was appointed LSI president and CEO, and was elected to the company's board of directors at the same time. He joined LSI from Intel Corp. where he served as VP and co-general manager of Intel's business client, server, storage and communications businesses. Previously, he served as VP and general manager for developing, marketing, and supporting Intel business strategies for enterprise computing.

Post-transformation mode
"I claim the transformation is behind us, and we are in a mode of execution," said Talwalkar. "The last three quarters we've exceeded expectations and seen bottom line expansion and design win expansion at record levels.

"We've stopped calling on markets beyond storage and networking, so it's all about delivering higher levels of value in those two markets," he added.

That means LSI needs to supply an increasing amount of the silicon blocks for the ASICs it builds, something Talwalkar claims is happening. Customer-supplied intellectual property "is probably down to 20 percent and we're bringing 80 percent of the IP to the table ourselves," he said.

The transformation for LSI does not mean the end of ASICs, which still make up nearly half the company's business.

"There are some segments in storage and networking that will always be custom, like hard drives," he said. "There are a lot of common foundation blocks for these components, but you can't take a chip from a Seagate drive and plug it into a Western Digital drive," he said.

Thus, LSI's business "will slowly lean more to standard products, but some of our segments will continue to be custom in nature," he said.

Getting out of manufacturing
In a more radical shift, LSI is now almost completely out of manufacturing, turning to third parties such as TSMC and Chartered to make and package its chips and boards. It sold its fab two years ago, sold assembly and test operations six months ago, and is about to dispose of a systems manufacturing site in Kansas.

"This will be the last quarter we will do any of our own internal manufacturing," Talwalkar shared.

That's quite a shift for the company that once set the pace in being an ASIC designer and foundry for Silicon Valley. But the industry is also about rapid change, and Talwalkar gets that.

"You have to have scale and innovate or you are going to die a slow deathor maybe a fast one," he said.

- Rick Merritt
EE Times

- Additional reporting by EE Times-Asia





Article Comments - Transformed LSI shifts to implementa...
Comments:??
*? You can enter [0] more charecters.
*Verify code:
?
?
Webinars

Seminars

Visit Asia Webinars to learn about the latest in technology and get practical design tips.

?
?
Back to Top