LSI Lassos SiliconStor

Chip vendor picks up startup for $55M, moves further into blended SAS/SATA

February 17, 2007

3 Min Read
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Chip vendor LSI Logic has acquired semiconductor startup SiliconStor in a $55 million deal as it attempts to link Serial Attached SCSI (SAS) and Serial ATA (SATA). (See LSI Pays $55M for SiliconStor.)

The all-cash transaction, expected to close in the first quarter of 2007, highlights the growing demand from users for tiered storage. (See Qualcomm, What's the Best Way to Set Up Tiered Storage?, Tiers Without Tears, and B&S Insider: SAS and SATA Report.)

SiliconStor sells multiplexer chips that connect SAS and SATA drives and was first identified as acquisition bait almost two years ago. (See SiliconStor Socks Away $9M.) The device, which is called an AAMUX, provides a dual port path between SATA drives and a SAS controller. (See SiliconStor Intros Multiplexer and SiliconStor Samples SATA.)

The SiliconStor deal is small potatoes compared to LSI's recent $4 billion acquisition of chip vendor Agere Systems, although it reflects the current trend towards mixing high-performance SAS and low-cost SATA in the same array. (See A New Landscape for Disk and LSI to Buy Agere for $4B.)

Users, according to Enterprise Strategy Group analyst Mark Bowker, are seriously eyeing the possibilities of mixed storage. "There's no question that interest is growing," he explains. "SAS can offer the similar performance of Fibre Channel whereas SATA is less expensive and larger capacity."That said, the analyst warns that getting these technologies to work together is not always easy. "The qualification process for the SATA drives is pretty lengthy," he says, explaining that there is a great deal of testing needed prior to deploying the drives in a SAS/SATA backplane.

SiliconStor's AAMUX aims to resolve this problem by acting as a bridge between the different electrical components used by SAS and SATA drives. LSI has been championing SAS for the last few years, although the vendor is now keen to sell a broader range of technology to its OEM partners such as EqualLogic. (See LSI Rolls SAS for DAS, LSI Launches SAS, and EqualLogic Mixes SAS, iSCSI.)

LSI is not the only firm opening its wallet for technology to link different forms of storage. Last year, for example, another chip vendor, Emulex, spent $180 million to acquire Fibre Channel-to-SATA bridge and router startup Sierra Logic. (See Emulex Secures Sierra Logic and Emulex Reports Earnings.)

At this stage, LSI is unwilling to reveal its roadmap for SiliconStor's technology, although it seems likely that the AAMUX will be sold as a card, which the vendor's OEM partners can fit into drive canisters.

Initial indications are that SiliconStor's 30-strong workforce will be moving over to LSI. "There's a lot of expertise there, and we need that expertise," says Bruce Trunck, director of technology and business development at LSI Logic. Still, no decision has been made on whether SiliconStor CEO Michael Ofstedahl and his management team will be making the move.More M&A is also a possibility for LSI, although Trunck was not giving too much away when he spoke to Byte and Switch today. "We're always looking for opportunities to fill out our software portfolio and deliver a more complete solution," he said, although he refused to say which areas the company is looking into.

LSI appears to be on something of an acquisition tear at the moment. The Agere deal came just weeks after the vendor stumped up $50 million for storage virtualization startup StorAge Networking Technologies. (See LSI Annexes StoreAge.)

Despite this frenzy of activity, the market was largely unmoved by LSI's latest M&A foray. In early trading today, shares of LSI crept up 11 cents (1.18 percent) to $9.40.

James Rogers, Senior Editor Byte and Switch

  • Agere Systems Inc. (NYSE: AGR.A)

  • Enterprise Strategy Group (ESG)

  • EqualLogic Inc.

  • LSI Logic Corp. (NYSE: LSI)

  • SiliconStor Inc.

  • StoreAge Networking Technologies Ltd.

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