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LSI to acquire SandForce for $322 million

Deal for flash storage processor provider gives LSI an expanded position in the market for solid-state drives made with NAND flash memory chips.

LSI's WarpDrive products already use SandForce's flash storage processors. LSI

Chipmaker LSI said today it has signed a deal to acquire privately held flash storage processor provider SandForce for $322 million in cash.

The acquisition will give the Milpitas, Calif.-based-semiconductor maker--previously known as LSI Logic--an expanded presence in the fast-growing market for solid-state drives made with NAND flash memory chips, like those typically found in smartphones and tablet computers. As flash prices decline, demand for flash SSDs is expected to overshadow traditional hard drives.

"Adding SandForce's technology to LSI's broad storage portfolio is consistent with our mission to accelerate storage and networking," LSI Chief Executive Abhi Talwalkar said in a statement. "The acquisition represents a significant, rapidly growing market opportunity for LSI over the next several years."

LSI was among the investors that backed the five-year-old startup in three previous rounds of financing and already uses SandForce flash storage processors in its WarpDrive products.

LSI will assume about $48 million worth of unvested stock options and restricted shares held by SandForce employees. The deal, which is subject to regulatory approval, is expected to close in the first quarter of 2012.