LSI Logic to Go Fabless

The sale of the chipmaker's Oregon factory will mean reliance on its foundry partners.
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LSI Logic

(LSI) - Get Report

, along with new leadership, has a new business plan to allow other companies to manufacture its chips.

The announcement to sell its Gresham, Ore., production factory was made late Tuesday, a day before the company hosts a meeting with analysts. Shares closed the regular session up 2.8% to $10.29.

The move marks another shift for the Milpitas, Calif.-based company since Abhi Talwalkar, formerly of


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joined LSI as CEO in May. Last month, LSI was reorganized into four product groups.

Talwalkar's changes have

reinvigorated the stock, which has almost doubled under his stewardship.

The announcement of the sale is designed to allow LSI to take advantage of what's known as a fabless business model. Fabs, or semiconductor fabrication facilities, currently cost around $3 billion and have a useful life of only several years.

Several companies, mostly based in Taiwan, operate as foundries for chipmakers, building and operating chip factories for other companies.

LSI has utilized its own factories and those of foundries, in what is dubbed a fab-lite production model, but that will be a thing of the past after the sale of its factory.

The company, which designs and produces integrated circuits and storage systems, counts among its foundry partners

Taiwan Semiconductor

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United Microelectronics

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Semiconductor Manufacturing International



LSI said to expect restructuring and associated charges of $75 million to $110 million during the current quarter for asset writedowns, severance and other expenses.