Seagate Acquires SandForce From Avago/LSIby Kristian Vättö on May 29, 2014 10:25 AM EST
Seagate has just announced that they will be acquiring LSI's Accelerated Solution Division and Flash Components Division from Avago, which translate to LSI's Nytro lineup along with the SSD controller focused SandForce. This announcement comes as a surprise because about six months ago, Avago announced that they will be acquiring LSI, so this sale comes only a few weeks after that acquisition was closed. Seagate will be paying Avago $450 million in cash and the transaction is expected to close in Q3'14.
For Seagate this deal is a steal. Back in 2011, LSI paid $370 million ($332m in cash and $48m in stock) for SandForce alone and now Seagate is getting LSI's flash accelerator business for only $80 million more. Since Seagate doesn't have any SSD controller technology, this acquisition is huge for them because so far they have been relying on third parties for controllers and NAND. Without controller IP, it's relatively hard to be competitive in the SSD market because you can't differentiate your product. With SandForce Seagate will be able to become a serious player in the SSD space and I'm sure one of the reasons why Seagate had to act quickly is WD's recent acquisitions in the SSD industry (STEC, Virident & VeloBit).
It makes sense from Avago's angle too. I've been hearing that LSI/Avago hasn't been very happy about the SF3700 delays, so that might explain why the price seems a bit low. I'm also thinking that Avago was never interested in LSI's flash business in the first place and that's why Avago decided to liquidate it so quickly after the acquisition.
At this point it's too early to say what this means to the SSD industry as a whole. SandForce's licensing model has been one of the corner stones for the industry as it has allowed OEMs with no controller or NAND technology to easily enter the market. The press release doesn't directly disclose whether Seagate will continue to license SandForce controllers to other OEMs but I'm fairly sure they will as Seagate expects the enterprise SSD and SSD controller lineup to generate at least $150 million in revenue next year.
All in all, this is certainly very interesting news. I'm trying to get in touch with Seagate/LSI to get more details about this acquisition and it's details, so stay tuned for more news and analysis.
Source: Seagate PR
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BMNify - Thursday, May 29, 2014 - link+1000
odoyle-rulez - Friday, June 19, 2015 - linkIf you look past the grandiose fairy tells that LSI was telling in 2012 and 2013, what sticks out is that LSI could never close a major deal with their PCIe-SSD products. Time after time, all the big companies (Google, FB, Microsoft, etc.) either went with in house designs for Flash storage or awarded Fusion IO the business. Prior to LSI getting bought out, the lack of success and execution by the ASD organization had caused that group to get merged back into a single storage group with the RAID (RSD) folks. Once Avago got a good look at the books and the product development, the decision pretty much made itself for them. Avago makes money, and that group was failing to pull their weight.
Seagate is the last stop for the LSI/Avago ASD group. I am sure that they have already started to purge a good deal of the employees who came over, particularly in management. Seagate will either push the Nytro products into actual relevancy in the marketplace or absorb the technology into future products and drop the product line altogether.
jwcalla - Thursday, May 29, 2014 - linkLSI never really did much with SF. It just kind of withered on the vine it seems.
Wall Street - Thursday, May 29, 2014 - linkI am surprised that so may sites are surprised. LSI took on over $5 bn. of debt to acquire Avago. High growth businesses generally require a lot of investment relative to the amount of cash flow that they generate because so much of the money needs to be rolled into the next generation of product. Sandforce would clearly be a good candidate where LSI could sell it off for a high cash value and use the proceeds to pay down some of the debt. This seems like a logical move, LSI isn't really in a position to pour more money into Sandforce R&D who need it for their next gen controller. Seagate has the money in the short tern and will look to develop Sandforce's long-term potential to wedge themselves into the SSD market.
isa - Friday, May 30, 2014 - linkWell, if the SF3700's are really delayed, this acquisition isn't going to help in the short run: engineers and other employees understandably will be heavily distracted for many days as they await their true fate, new management, priorities, work location, benefits impact, etc. Doubtful many will trust or believe the inevitable initial message of "nothing really changes: keep working!"
And if really delayed prior to this acquisition, I hope the Anandtech crew can pick up insightful info at Computex for what's the cause(s) of the delay up to this point. I doubt any SSD maker will comment honestly and specifically on the record, so I'd expect specific insights to be understandably unattributed.
MS - Friday, May 30, 2014 - linkIt will be interesting to see how the IP plays out. I know that I have been issued at least 2 patents on technology used by Sandforce, even though those patents are owned by Toshiba now (courtesy of the OCZ acquisition). Those go back to the crazy times when Ryan and I were just looking into the crystal ball and everybody called us Loonies and now some .... have a chance to harvest the fruit of our (no, it is not loins).. :P
bji - Monday, June 2, 2014 - linkThe fruit of your what? Patent trolling? Or did you actually attempt to create product from these patents you acquired?