Seagate buying LSI/Avago's flash products unit for $450M

|About: Seagate Technology (STX)|By:, SA News Editor

Seagate (STX) is expanding its flash storage lineup - generally seen as a weakness as flash encroaches on hard drives - in a big way by acquiring LSI's PCIe server flash storage module/flash controller chip unit from new LSI parent Avago (AVGO) for $450M in cash.

Seagate, which already offers SSDs, notes the LSI unit is the #2 player in the PCIe flash market - Fusion-io (FIO +1%) is the largest - and that its offerings in the space are optimized for cloud/hyperscale deployments - Fusion-io also has a keen interest in this area. The unit's SandForce controllers have a number of SSD design wins.

Seagate expects its enterprise SSD and controller ops to produce at least $150M in revenue in FY15 (ends June '15), albeit with an op. margin headwind of $30M-$40M. Better profitability is expected in FY16.

The deal follows a string of flash storage acquisitions from archrival Western Digital: PCIe flash vendor Virident, SSD vendor sTec, and SSD caching software startup Velobit.

It appears to remove one more potential suitor for Fusion-io, long the subject of M&A speculation.