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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  • Homeles - Thursday, May 29, 2014 - link

    My first reaction to this was a negative one. I'm worried that Seagate won't develop Sandforce as well as LSI could.
  • nirolf - Thursday, May 29, 2014 - link

    I'm not to thrilled either, I hope the SSD market won't end up like the HDD one. Very few players (basically a duopoly) with high prices and low quality.
  • Murloc - Thursday, May 29, 2014 - link

    I never felt the need for anything different from what was offered. There were 4 big companies and HDDs were cheap.
    The SSD market already has more players than that.
  • TerdFerguson - Saturday, May 31, 2014 - link

    Murloc said, "I never felt the need for anything different from what was offered. There were 4 big companies and HDDs were cheap."

    Then you haven't been paying attention. The blatant price fixing at play after the Tawain floods, along with tripling of prices, reduction of quality and warranty, and subsequent postings of record years are a good example of the OP's message.
  • TSnor - Sunday, June 1, 2014 - link

    +1 re prices that didn't make sense and record profits.
  • ZeDestructor - Thursday, May 29, 2014 - link

    Fairly unlikely:

    We have three NAND manufacturers: Intel/Micron, Toshiba and Samsung; and a bunch of controllers: Intel, Marvell, Samsung, LAMD, Sandforce and JMicron, as well as more exotic stuff in the PCIe cards, with lots of the variability coming purely from the firmware. Things are looking good!
  • Penti - Thursday, May 29, 2014 - link

    Don't forget about Hynix here, they do have proper NAND (and controller), there just happens to be no other (than these mentioned) significant memory companies around any more. If you count both Intel and Micron in IMFT I guess we can count Sandisk too when they "resell" Toshiba NAND as part of their joint investment.

    It looks more like four NAND vendors, Samsung, Toshiba, IMFT and SK Hynix. As said, there isn't really any proper memory manufacturers other than these either, not any more. Latest victim was Elpida which was absorobed into Micron. Many more before it. Companies like Spansion were pioneers, but focuses on other areas. Four is of course more than the three we have in mechanical HDD's that was 4-5 players not long ago.
  • Morawka - Friday, May 30, 2014 - link

    the only company charging high prices is Western Digital. Seagate has always been a Value Brand. Even when the flooding happened, Seagate drives did not increase in price much. WD on the other hand was charging $350 for a 1TB WD Black Drive for almost 3 years.

    I understand a temporary spike while the plant gets repaird, but WD milked it way to long.
  • ViRGE - Thursday, May 29, 2014 - link

    I second that concern. Seagate has not instilled me with confidence over the years. They always seem to come up short in some way.
  • tuklap - Monday, June 2, 2014 - link

    Seagate will continue to improve the technology that LSI left and will also adopt them on their SSHD variants which leads better value to performance for users. :)

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