Original Link: http://www.anandtech.com/show/8073/seagate-acquires-sandforce-from-avagolsi

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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