And even as storage remains in focus at LSI Logic, some question whether the parent company's love takes in subsystems, sold by its subsidiary Engenio Information Technologies Inc., as well as ASICs.
It's a logical question in light of recent developments. Engenio, originally set to spin off from LSI Logic last summer, has ditched the IPO plans for now (see Engenio Gets Cold Feet). And news of a new OEM deal with Sun Microsystems Inc. (Nasdaq: SUNW) has been dogged by speculation that another OEM relationship with IBM Corp. (NYSE: IBM) could sour in light of IBM's latest Shark announcement -- which is a bit too close to Engenio's market for total investor comfort (see IBM Still Loves Engenio and Engenio's Sun Rises).
Would LSI Logic sell Engenio? Given the vagaries of the subsystem market and the overall stake LSI's got in an eventual IPO, the answer seems a clear "not yet." On the plus side, Engenio raked in $97 million, or 25 percent, of LSI's total revenue this quarter. That compares with $144 million, or 38 percent, from storage components; $70 million, or 19 percent, from communications chips; and $69 million, or 18 percent, from consumer chips.
There's also some evidence that Engenio's new deal with Sun is a threat to Dot Hill Systems Corp. (Nasdaq: HILL), especially given Engenio's support of both Fibre Channel and SATA drives in the StorEdge 6130, the product that's selling through Sun.
"Unfortunately the StorEdge 6130 appears cannibalistic to the upper end of the Dot Hill business at Sun," writes analyst Thomas Curlin of RBC Capital Markets in a note to Dot Hill clients today. "Furthermore, the availability of a SATA option for this new product probably may dilute the new SATA-based product ramp for Dot Hill at Sun."
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