Avago/LSI Points to Maturing Industry

Rick Merritt, EETimes
12/16/2013 02:25 PM EST

SAN JOSE, Calif. — In a sign of the maturing semiconductor industry, Avago Technologies Ltd. announced plans to acquire LSI Corp. for $6.6 billion in cash and loans. The deal creates a bigger, broader communications chip designer that expects slower revenue growth but higher profits.

Overall, the combination is a wise move that Wall Street is already giving a thumbs-up with increased stock prices for both companies. It also is a sign of slowing growth and increasing risk aversion in the maturing market for semiconductors.

The two companies have little product overlap and some potential for product and technology synergy. LSI brings a significant business in storage, primarily hard-disk-drive chips, storage networking boards, and solid-state drive controllers. Avago does about half its business in various handset and basestation RF chips and the rest in a mix of mainly optical components.

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