Abhijit Y Talwalkar, president and CEO, LSI Corporation spoke to Dataquest on the companys strategy post the Agere merger. Abhijit, born in India, took over this role in May 2005, succeeding Wilfred J Corrigan, LSIs founder. Talwalkar joined the company from Intel Corporation, where he served as VP and co-general manager of the Digital Enterprise Group. He also served as VP and GM for Intels Enterprise Platform Group. Talwalkar has more than twenty years of experience in management and engineering in the semiconductor industry, with positions in research, product development and marketing. Talwalkar received his bachelors degree in Electrical Engineering from the Oregon State University

What is the state of the transformation initiatives carried out at LSI post the Agere merger?
The first significant change in LSIs strategy came in 2006 when we announced that we are going fabless. We have been changing the companys dimensions in the last 18-24 months as an overall strategy to become more market-led and to establish sufficient scale in the growth markets. But, that period is over. Now it is all about executing the new strategy in continuing to drive our storage business. We aim to deliver consistently the needs of the market, and grow.

The merger with Agere was a major step in the overall evolution of the company and to enhance our positioning in the storage business. The other objective was to enter the networking space considering the synergies between networking and storage, in terms of base level technologies and the market. This commonality will increase as more and more storage becomes IP or packet-based.

The other idea behind combining these two companies was economies of scale. The semiconductor investments have been increasing in the last ten years and companies are spending much more in R&D as the percentage of sales goes up. We are now being asked to do more and more of systems. It just does not stop at siliconfirmware, software, and architecting the systems is also important. In some of the segments, we are developing the entire system. Our R&D has also gone up in turn driving some of the consolidations that we see. This has been very motivating.

Why did you choose to exit the consumer and mobility businesses, considering that they are growing?
We have a two-pillar focus. The decision to exit mobility was made to make sure we could participate in the market and have the scale. The mobility business has a large market growing very rapidly, but there is a minimum level of R&D scale, and the revenue scale had to be competitive. It was critical for us to address that issue and it was also critical for Infineon to address the same.

As for our existing consumer businesses, like the electronics business, they were focused on segments associated with media processors and other building blocks. We felt that we did not have the scale to stay in the market. This market is highly volatile and unpredictable, and it is difficult to say which consumer product would be successful. I am a firm believer in being #1 or #2 in the market place and having sufficient market scales. We have very good scales in our storage business.

If you look at companies that sell either chips or other forms of building blocks to the OEMs for storage, we are the biggest players in the industry. We are ahead of our nearest competitor by two times and have the widest range of product portfolio. We do everything from systems (for companies like IBM) to very complex technology that goes into hard drives. Seagate, IBM, and Samsung are some of our biggest customers. We sell to almost every single hard drive OEM vendor. Our storage market continues to grow in every possible segmentconsumers, enterprises, as well as service providers. We see storage driving our growth in the next 5-7 years.

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