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QLogic Gives Up Controllers

QLogic is selling its controller chip business to Marvell Technology Group Ltd. (Nasdaq: MRVL) and will henceforth focus on its SAN HBAs and switches (see Marvell Buys QLogic Unit).

QLogic announced late Monday afternoon that Marvell purchased its hard disk and tape driver controller semiconductor unit for $225 million -- $180 million in cash and $45 million in Marvell common stock. The companies expect the deal to close within 60 days.

Now QLogic is expected to turn into a buyer. The Marvell deal will leave QLogic with around $1 billion in cash, and CEO H.K. Desai says he will likely use some of that money to invest in existing and new SAN markets.

We’ve transitioned from a silicon company to a SAN infrastructure company,” Desai said on a conference call to discuss the sale.

QLogic sells hard drive and tape controllers through OEM deals with Fujitsu Ltd. (OTC: FJTSY; Tokyo: 6702) and Hitachi Global Storage Technologies (Hitachi GST). Controller silicon accounts for about 25 percent of QLogic’s revenues, but revenues declined sequentially last quarter and Desai expects them to decline again this quarter.

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