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.
What is your strategy for the networking market?
Our networking business is mainly focused on enterprise connectivity, mostly
around the LAN and SAN. Most of it is custom silicon in nature and this supports
modular switches, larger director class switches and routers. Cisco, Huawei, and
HP Procurve are some of our customers. Enterprises are going through another
major upgrade cycle. Data traffic within an enterprise is growing and the amount
of videos used in enterprises is also increasing due to training needs and other
collaborations.
The other area of our networking focus has to do with the next
build out that will happen in the service provider space. The last build out was
the Internet to wireless. Before that, in the 60s and 70s, it was analog to
digital. And, now, it is all the carriers focusing on replacing their declining
voice-based revenues and delivering new services based on IP packets and high
bandwidth which converge services based on data. Most of the telecom equipment
vendors are our customers in this space.
We are involved in the premises level, especially on small and
medium businesses. As these service providers deliver converged services, there
is a need for a platform which brings services into the premises, as well as
allow service providers to manage services and be able to differentiate those
services based on customer requirement.
I am a firm believer in being #1 or #2 in the market place and having sufficient market scales. I felt that we did not have the scale to stay in the market for mobility and consumer businesses |
For example, Nortel is doing trials in twenty cities in the US
with Verizon, based on a converged platform gateway called the Media Services
Business Gateway. This is a box that has a lot of silicon and software and costs
around $600-1000. This box will provide everything from voice, video, and data.
So, in the core of the service provider network these services will have to be
created. The other area of our networking focus is the continued growth of the
access network, both wireless and wireline. I believe that we have a winning
recipe. We have the custom silicon with the LSI expertise and we also have a
high level of building block.
What are some of the new product lines you are looking at?
We introduced a completely new SAS technology, and we led and defined the
SAS (Serial Attached SCSI) standard, replacing the 25 year old standard SCSI
standard which LSI played an important role in inventing. Not only are we
shipping the SAS component into servers but also the storage systems being
shipped by companies like IBM. This is an entirely new product line from LSI.
This is delivering enterprise class level external RAID capability in entry
price points.
You have gone fabless, but you have fabs by virtue of the Agere
acquisitions. What is your manufacturing strategy then?
We announced the deal to sell that capability in Thailand to STATS ChipPAC.
We have an assembly and test operation in Singapore, which is going to wind
down. We intend to move out of systems manufacturing capability and outsource
the same to companies like Sanmina and Solectron. We now have a 51% financial
stake in a fab and we dont employ any people.
What is the state of your operation in India and what kind of
work is done out of here?
We have about 660 people and growing. Majority of who are for product
engineering. They contribute in many ways across all our products from doing the
complete chip design to working closely with some of our customers on the
systems side. There is also a software development expertise here. Some of the
teams do a complete chip design working with customers directly.
Sudesh Prasad
sudeshp@cybermedia.co.in