Seeking to add physical-layer (PHY)-based Ethernet technology to its core library and expand its standard product offerings, LSI Logic Corp. last week agreed to acquire Seeq Technology Inc. for $100 million in stock.
The deal will enable LSI to offer LAN-switch networking customers-including Cisco Systems, HP, and Nortel-ASIC products that integrate 10- and 100-Mbit Ethernet technology, said John Daane, LSI's executive vice president for communications, computer, and ASIC products.
The switch-fabric architecture of the ASICs that Milpitas, Calif.-based LSI currently sells to networking customers are designed by the OEM; LSI's MACs are integrated on the ASIC. With this acquisition, LSI could integrate Seeq's MACs and Ethernet-based PHY transceivers into the ASIC, Daane said.
In addition to adding this core to its CoreWare standard-cell library, the company can also offer the PHY transceivers as standard products.
"Seeq has very competitive products for that standard-product, physical-layer side for the 10- and 100-Mbit Ethernet market," he said. "And what they need is a good sales channel to distribute those products; they just don't have the momentum within the networking accounts."
Seeq showed promise in the PHY-IC Ethernet chip market in 1996 and 1997, but but was blindsided by Level One and Broadcom, who got their single-chip, multi-port PHY ICs out the door before their competitors
In 1998, Seeq attempted to regroup, and late last year, announced the world's first eight-port PHY IC for Fast Ethernet networks, beating Level One and Broadcom to the punch. However, most believe that Seeq has been unable to ship this eight-port device yet, while Broadcom is quietly sampling its chip.
Analysts viewed the deal as positive for LSI. "They've been entering more standard-product-type markets in recent years, and this is another step in that direction," said Dan Scovel of Fahnestock & Co. Inc., New York.
This is LSI's second acquisition in less than a year. In July, the company acquired I/O chip maker Symbios Inc. for $760 million.
The Seeq deal, to be completed in the second quarter, will be accretive to LSI's bottom line over the next year, the company said.
According to analysts' consensus estimates, LSI's earnings are projected to reach 76 cents per share in 1999.
Mark LaPedus contributed to this story.