LSI, which specializes in networking and storage software and semiconductors, is planning to buy SandForce, which makes flash storage processors for enterprise and client flash solutions and solid-state drives. Under the agreement announced Oct. 26, LSI will pay about $322 million, and will assume about $48 million of unvested stock options and restricted shares held by SandForce employees.
SandForce's products, which boast the company's DuraClass technology, include flash storage processors at the heart of PCIe flash adapters and SSDs. The acquisition is designed to enhance LSI's position in the fast-growing server and storage PCIe flash adapter market, where the WarpDrive family of products from LSI already uses SandForce flash storage processors. The transaction is expected to close early in the first quarter of 2012 subject to customary closing conditions and regulatory approvals. Upon closing, the SandForce team will become part of LSI's newly formed Flash Components Division, with SandForce President and CEO Michael Raam as general manager.
"The combination of SandForce and LSI allows us to deliver differentiated solutions in the PCIe flash adapter segment by tightly integrating flash memory and management," Raam said in a statement. "In addition, leveraging our flash storage processors with LSI's comprehensive IP portfolio and leading-edge silicon design platforms will lead to innovative solutions."
Founded in 2006, SandForce was initially funded by leading venture capital investors DCM and Storm Ventures and later joined by Translink Capital and Canaan Partners. The company's SSD Processors use DuraClass technology with Redundant Array of Independent Silicon Elements (RAISE) and DuraWrite technologies to drive deployment of volume flash memory into primary and I/O intensive data storage applications. To date, SandForce has shipped well more than 2 million SSD processors through more than 30 SandForce Driven and other SSD manufacturers in 18 months.
RAISE technology writes data across multiple flash die to enable recovery from a failure in a sector, page or entire block, just like the concept of multi-drive RAID used in disk-based storage. However, RAISE only requires a single drive. One of DuraClass' key features is DuraWrite, which optimizes the number of program cycles to the flash, along with Recycler, which intelligently performs garbage collection with a minimal impact on flash endurance.
"Flash-based solutions are critical for accelerating application performance in servers, storage and client devices," LSI President and CEO Abhi Talwalkar said in a statement. "Adding SandForce's technology to LSI's broad storage portfolio is consistent with our mission to accelerate storage and networking. The acquisition represents a significant, rapidly growing market opportunity for LSI over the next several years."
Earlier this week, LSI reported results for its third quarter, noting revenues from continuing operations of $547 million, in line with guidance, compared to $453 million generated from continuing operations in the third quarter of 2010, and compared to $501 million generated from continuing operations in the second quarter of 2011. The company noted its fourth quarter outlook, with projected revenues from continuing operations of $500 million to $550 million, reflects supply chain impacts and uncertainties due to recent flooding in Thailand.