Seagate Technology will buy LSI's flash storage business from Avago Technologies for $450 million in cash.
The deal will expand Seagate's offerings and future capabilities in the fast-growing flash storage business. The assets include LSI's Accelerated Solutions Division (ASD), which makes enterprise-class products with PCIe interfaces, and the Flash Components Division (FCD), known for the popular SandForce line of controllers for high-volume flash components. Seagate expects the transaction to close in the third quarter of this year.
Earlier this month, Singapore-based Avago closed a $6.6 billion buyout of LSI, which makes wired and wireless network components as well as storage technologies.
Seagate is a major supplier of spinning hard disk drives, and flash is playing a growing role in both consumer and enterprise storage. Established vendors and startups alike are introducing all-flash and hybrid arrays built with SSDs (solid-state drives) as well as server-based flash products that use PCIe. Speed, size and power consumption are the major drivers of the shift.
Controllers, like LSI's SandForce line, play a key role in achieving more performance and reliability in flash components.
Seagate had to make a move in flash because virtualization and mobile computing are making solid state a much bigger part of storage, said Forrester Research analyst Henry Baltazar.
"The future's going to be flash, for a lot of storage," Baltazar said. The exception will be "cheap and deep" storage for data that's used less often, where hard disks will remain, he said.
The company seems to be embarking on a broader expansion of its business, including its acquisition last December of Xyratex, which builds custom systems for high-performance computing environments, Baltazar said. That purchase could help Seagate make higher-margin products for its OEM customers, though it's unlikely to start selling its own branded gear, he said.
"Clearly, they want to be more than just a hard-drive player," Baltazar said.
Seagate's hard-drive rival Western Digital isn't standing still in flash, either. Last September, WD acquired enterprise SSD vendor Virident for $685 million.