LSI Corporation announced a strategic initiative to transition the worldwide assembly and testing of its semiconductor and storage systems products to contract manufacturers. In connection with this, LSI will sell its semiconductor assembly and test operations in Pathumthani, Thailand to STATS ChipPAC for approximately $100 million. The Thailand facility consists of approximately 440,000 square feet of floor space and employs approximately 1100 people. STATS ChipPAC will offer employment to substantially all of the LSI manufacturing employees based at the site, with the remaining non-manufacturing workforce expected to continue their employment with LSI. STATS ChipPAC and LSI will also enter into additional agreements, including a multi-year wafer assembly and test agreement and a transition services agreement. The transaction is expected to close within 90 days.

As part of the above actions, LSI will eliminate approximately 2100 production positions worldwide. The transition is expected to reduce annual capital expenditures by $20 to $25 million beginning in 2008.