LSI continues move to fabless model with close of consumer products biz sale

By Colleen Taylor, Contributing Editor -- Electronic News, 8/1/2007

Marking one more step of the increasingly small company's move to a completely fabless business model that is expected to shed a total of 2,100 jobs from its workforce, LSI Corp. announced on Tuesday the completion of the sale of its consumer products business to Magnum Semiconductor Inc.

Under the terms of a definitive agreement first announced in June, Magnum has purchased the LSI DoMiNo, Domino[X] and Zevio architectures, products and related IP of the LSI consumer products business. Additionally, Magnum has offered employment to a "significant number" of LSI employees associated with the business, LSI said in a statement. LSI has said that the sale of its consumer products business will lighten its non-production workforce by 13 percent, or about 900 jobs.

Financial terms of the sale, which was funded by private equity investment, have not been disclosed.

Major changes have been under way at LSI for some time now. In March 2006, LSI moved away from ASIC technology, and in July 2006, announced plans to sell its DSP unit. Then in April, the company adopted a three-phase “business acceleration plan” upon closing its $4 billion merger with Agere Systems Inc. At the time the merger became effective, LSI was said to be considering job cuts and facilities consolidation as part of an effort to save about $125 million in 2008.

Last month, LSI sold its test and assembly operation in Pathumthani, Thailand, to STATS ChipPAC Ltd. for about $100 million.

LSI also announced last month that it will transition its semiconductor and storage systems assembly and test operations performed at its facilities in Singapore and Wichita, Kansas, to unspecified contract manufacturing partners, a transition which is expected to be completed in the first half of 2008.